PORT ANGELES — Sound financial policies and council-identified priorities have improved the city of Port Angeles’ bond rating, City Manager Dan McKeen announced last week.
Moody’s Investors Service has raised the city’s bond rating from a “decent” A2 and A3 to a “substantially higher” Aa3, McKeen told the City Council on July 17.
The improved investment-grade rating means the city would pay less for future bonds and could save substantial sums of money by reissuing existing debt.
“That could save our citizens not hundreds of thousands, but sometimes even millions of dollars, depending upon the bond,” McKeen said.
Acting Finance Director Tess Agesson said the first opportunity for the city to reissue existing debt would be in six to seven years when the limited tax general obligation bond that paid for the landfill bluff stabilization project at the Port Angeles Regional Transfer Station reaches its 10th year.
Meanwhile, city officials have no plans to take on new debt.
“That was another reason why we had such a great rating,” Agesson said, “because we haven’t gone out for governmental bonds in the last few years.”
“We’ve been maintaining and paying as we go, and they really like that,” Agesson added.
The city’s last bond rating was set in 2006.
In the recent evaluation for a new bond rating, Moody’s officials recognized that Port Angeles has a relatively low average family income, McKeen said.
“Our citizens’ ability to pay is not the same as many other communities, and that affects the rating also,” McKeen said.
“But the reason we got such a high rating was because of all the other hard work we did, and because of our financial health. We have financial challenges, but we also have reasonable, in fact, good financial health in the way that we approach our finances.”
When McKeen became city manager in 2012, it was discovered mid-year that the city was projected to lose about $800,000 by year’s end.
After making some “difficult budget decisions” to stem the tide, the council mounted a two-pronged strategy for long-term financial health by developing financial policies and going through a priority-setting process, McKeen said.
“We did use that priority-setting process in shedding some of our sustainable expenses and we were able to maintain a balanced budget,” McKeen said.
Among the new financial policies was a council directive of having a 25 percent reserve fund balance as compared to general fund spending.
“I’m happy to say that we’re over the 25-percent general fund reserve requirement that we implemented from a 10 percent years ago,” McKeen said.
The current City Council, which includes four freshmen members, has embarked on a new priority-setting process.
Reporter Rob Ollikainen can be reached at 360-452-2345, ext. 56450, or at [email protected].