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S&P downgrades Floresville debt rating
Wilson County NewsJuly 3, 2013 | 1,485 views | 6 comments
DALLAS -- Standard & Poor’s Ratings Services has lowered its underlying rating (SPUR) on the city of Floresville’s general obligation debt outstanding two notches to “BBB” from
“A-.” The outlook is stable.
“The downgrade is due primarily to our view of the deterioration of the city’s financial position to a level that we no longer deem to be commensurate with an ‘A-’ rating,” said Standard & Poor’s credit analyst Lauren Spalten.
In addition, the rating reflects S&P’s view of the city’s:
•Lack of willingness to align recurring revenues with spending, coupled with lower-than-budgeted revenues and higher-than-budgeted expenditures;
•Adequate wealth and income levels; and
•Moderately high overall net debt burden as a percent of market value and elevated debt service carrying charges.
The stable outlook reflects Standard & Poor’s anticipation that the city’s operations will remain imbalanced during the near term, as well as its view of the city’s adoption of an insolvency plan to achieve a positive fund balance.
“We could raise the rating if the city fully implements the steps outlined in its insolvency plan and its financial position improves,” the agency stated. “However, if the city fails to implement the steps outlined in its insolvency plan and its financial position deteriorates further, we could lower the rating further.”
The downgrade, the insolvency plan, and how they will factor into the city’s fiscal year 2014 budget were part of a discussion during the Floresville City Council’s budget workshop prior to its June 27 meeting. Councilman Jim Miller said the city will be looking more closely at how it implements a salary plan for the coming year. Miller said that a cost-of-living adjustment for employee pay could not be considered until the city can meet its commitment to a contribution to its reserves and to debt reduction.
City Manager Andy Joslin said there likely will be no increase in staff, as he and the council continue to carve out a zero-based budget plan. With this approach, the city projects the overall operating cost for the next fiscal year before adjusting the proposed tax rate accordingly.
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Section A: General News Archives
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Court Update (February 3, 2016)
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