Ratings methodology change leads to bond upgrade for Jacksonville

Lenny Curry does not draw a pension, keeping a campaign promise.

Some good news for Jacksonville came Monday via another bond upgrade.

Standard & Poor’s Ratings Services announced an uptick in the special revenue bond rating to ‘AA’ from ‘AA-’.

“This latest upgrade further demonstrates our continued and strong focus on fiscal responsibility is making a difference for our citizens,” said Mayor Lenny Curry. “We continue to work hard to enhance the City’s standing with investors by doing all we can to ensure the City’s financial stability for years to come. Improved credit ratings can save our city millions of dollars on future debt issues by lowering borrowing costs, which is good for taxpayers.”

Per the media release: “Citing a change to their ratings methodology, S&P said they now consider both non-ad valorem and general fund pledges as equal since both are dependent on the successful operation of the City. The City of Jacksonville’s special revenue pledge is a non-ad valorem pledge, and backs $1.027 billion of the City’s debt outstanding as of Sept. 30, 2017.”

This is another data point for the city’s narrative of sound financial management, one that has been challenged by external sources.

In October, a Bloomberg analysis cited Jacksonville’s high fixed costs as a warning sign: Jacksonville has the highest fixed cost ratio (31.6 percent) of any city with over 250,000 residents.

“When you measure those fixed costs against a city’s operating budget, no major city is as embattled as Jacksonville, Florida. In the city of 881,000 people, fixed costs are 31.4 percent of expenses, according to data compiled by Bloomberg. That’s driven by pensions, which made up almost 18 percent of expenses in fiscal 2016,” the report says.

Curry administration spox Marsha Oliver said that analysis was “inaccurate and overstate our employer pension contributions. It appears that they have included JEA’s pension expenses in our figure. This is flawed and does not provide an accurate comparison to other cities.”

Last summer’s successful sale of $147 million worth of bonds was described by Jacksonville’s chief administrative officer, Sam Mousa, in August as people “scrambling to buy” Jacksonville bonds, “a great indication of how great those bonds are.”

“The ratings agencies did well in looking at our history, stability, willingness to pay… these are good, stable bonds to invest in,” Mousa said.