Last week, Standard & Poor’s, the credit rating agency downgraded the City of Atlanta’s rating to A with a stable outlook from AA-. A rating with a stable outlook by S&P is considered to be a good investment grade rating, particularly considering the current recession.
The factors cited for the downgrade were:
- Our General Fund balance during these very turbulent economic times. We currently have a budgeted reserve of $28M plus an unreserved fund balance of $5.7M in the General Fund, other governments have significant reserves to cope with the negative economic impact.
- The negative fund balances in Solid Waste and some of our other governmental funds (which include E911, Capital Finance Fund, and Underground Atlanta).
- The rating company recognizes that we are working hard to bridge our revenue shortfall.
While we are disappointed with the downgrade, but with the current revenue shortfall and the reduction in the General Fund reserves, we expected that some rating agencies might reduce our General Fund bond rating. We are continuing to work on closing the shortfall during the current recession so that our reserves can be rebuilt and we can improve our ratings in the future. This rating does not affect the Department of Watershed Management or Hartsfield-Jackson Atlanta International Airport.
Jim Glass
City of Atlanta, Chief Financial Officer