During yesterday's city council meeting, it was announced that Toledo's bond ratings had been increased. Moody's raised the city's rating from "A3 with a negative outlook" to "A3 with a stable outlook," while Standard & Poor's raised the rating from A to A+.
In a news release, Standard & Poor's cited the city's efforts to balance its budget and increase its reserve fund as well as the successful renewal of the city's income tax in March.
This is a good news-bad news situation, though many may not see the 'bad news' portion of the announcement.
Yes, it's good news that our city's bond rating has improved. This means that the city can get better interest rates when it borrows money. However, that's the bad news - the city can get better interest rates when it borrows money. It's only a matter of time before our elected officials put our city further into debt because of the lower interest rate.
Our city officials have a tendency to look only at today - or the duration of their term - when it comes to making spending decisions. To celebrate the lower interest rate on our borrowing is good - but to continue to borrow money isn't.
We borrowed money from the State Infrastructure Bank to fund the building of a park at the Marina District - and while the city only drew down about $1.5 million of the $5 million available, they still plan to access the remaining funds for other public projects in that area.
And now it won't cost us as much to borrow such funds...isn't that terrific???
Sadly, I fear that these better bond ratings won't be good for the city in the long run, even if they save us some money up front.
Wednesday, July 16, 2008
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3 comments:
Yet another teaching moment wasted on the unteachable, I'm afraid.
Poor Person: "What can I do to become rich?"
Rich Person: "Why just watch what the poor people do, and don't do that..."
I'm afraid that this joyous moment will be wasted on our "drunken sailors on shore leave" political leaders and we will again find ourselves deeper in debt, as you said, because they just can't help themselves...
Stupid is as stupid does.
Maggie,
It's sad that such a wonderfully positive moment should be marked only by the feeding frenzy over credit (pun intended).
You are right to point out however, that all this allows the city to do is to crawl into debt at a better rate. Certainly this will inspire our city's leadership to greater fiscal responsibility (sarcasm off).
I read last night that there are only 19 cities in the entire country that have a AAA bond rating (the highest). Just so happens that 4 of those 19 cities are in the area where we are moving. Amazing what a responsible municipal government can achieve.
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