Top Bond Ratings Reaffirm Annapolis' Good Fiscal Health

August 06, 1991|By Gary Gately | Gary Gately,Staff writer

At a time when a soft economy has left many smaller cities awash in red ink, bond raters have pronounced Annapolis in excellent financialhealth.

The city has managed to retain its bond ratings from Standard & Poor's Corp. and Moody's Investor Services by raising propertytaxes and fees for city services last year and holding the line on spending for most city departments.

The ratings -- an A+ from Standard & Poor's and an A-1 from Moody's -- are generally considered the best possible for small cities like Annapolis.

And the good marks should pay off in the form of lower interest rates today, when the city sells $5.9 million worth of bonds to pay for construction projects.

Had the city's bond ratings dropped, interest rates for the bonds would have increased because lower ratings mean a bigger risk for investors. City officials, however,could not estimate how much the interest rates and, in turn, the cost of long-term debt might have increased.

"The fact that we retained the rating we had in a period of such economic downturn is quite an accomplishment," said William S. Tyler, the city's finance director.

He attributed the city's financial health to good budget planning, including a freeze on most city hiring, and increases in garbage fees and water and sewer rates to offset potential deficits.

The city had relied on some $2 million in annual revenue from its landfill to cover deficits for such services, but the landfill will reach capacity in 1992.

In the budget year that ended June 30, the city doubled garbage fees, raised water and sewer fees by nearly 25 percent and increased property taxes from $1.71 to $1.80 per $100 of assessed value.

Mayor Alfred A. Hopkins' $36.8 million spending plan for thenew budget year, which began July 1, retains the tax rate of $1.80, while freezing hiring citywide except for police.

The budget, approved by the City Council in June, also denied city workers cost-of-living pay increases and imposed across-the-board cutbacks for all citydepartments except police.

The City Council meets today at 11 a.m. to review bond bids expected to come from local financial institutions and national brokerage houses.

The estimated $5.9 million raised from the bond sale will pay for construction of the Gotts Court Parking garage, renovations to the Truxtun Park swimming pool and otherpublic works projects.

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