For the eighth year in a row, the City of Guelph has secured a AA+ rating from the Standard & Poors global rating agency. This good economic news comes in the midst of a fiscal year where Guelph has been hit with the negative effects of COVID-19 and the economic problems created by the pandemic, and although Guelph is not alone in these conditions, it seems again we’re doing better than some of the others.
“This strong AA+ credit rating is more important than ever given the current economy and state of emergency,” said Mayor Cam Guthrie in a statement. “It is the excellent financial practices of the recent years, and the commitment to meeting future fiscal responsibilities, that ensures a solid foundation for our community.”
What is that foundation? Guelph is still well situated geographically on the 401 corridor with a broad manufacturing sector and a large public service, which fosters long-term stability in the wake of the economic crisis created by the pandemic. S&P also notes that the City has had robust operating surpluses in the past, plus after-capital surpluses and better than expected revenue growth.
Although the report does warn of the added pressure of debt-financing on capital projects, it indicates that Guelph’s potential negatives are overcome by the real positives.
“The slowdown in economic activity brought about by the COVID-19 pandemic and its associated restrictions will create a challenging operating environment for Guelph in the next two years,” the report reads. “However, we believe that over the longer term the city’s economy will remain broadly healthy.”
S&P added that while Guelph’s economy will contract in 2020, the local economy could recover in two years. “Despite what we view as a temporary shock, we believe Guelph continues to demonstrate characteristics of a strong economy,” it said.
“Our AA+ rating, in a year of financial uncertainty, is accredited to our Council and staff who have worked tirelessly to respond to, manage and recover from COVID-19,” said Chief Administrative Officer Scott Stewart. “I’d also like to thank our local businesses, community partners and Guelph residents who continue to support and drive our economy as we navigate our way through recovery.”
This is the second piece of good economic news for Guelph in the last couple of weeks. The Government of Ontario announced last Monday that the City of Guelph is receiving $12 million in stimulus funding, which should effectively wipe out the City’s operating deficit for 2020. A report at the recent COVID-19 response meeting of city council pegged the losses caused by the pandemic at $10 million; the combined cost of COVID protections plus lost revenues is $24 million plus $14 million in cost savings.