Word that Moody’s Investor Service has removed Seattle from its “negative outlook” in regard to the city’s Aaa/Aa1 rating is very welcome news indeed.
It means that Seattle will be able to finance capital improvements through the selling of general bonds with lower interest rates than might otherwise have been imposed.
This positive outcome – the maintaining of the city’s high credit rating – would be worth trumpeting at any time. But it is especially great news at a time when Seattle is talking about large capital projects such as the rebuilding of the seawall along the waterfront.
One of the reasons why Seattle’s triple-A rating was affirmed likely is because of the city’s sound economic status. The city is not as dependent on federal projects as some other municipalities. That was a concerna few months ago when the federal government faced a possible downgrade due to congressional inaction on the budget. At that time, it looked as if some local governments and institutions would be adversely affected. Seattle and the University of Washington were two entities that were mentioned in the press as vulnerable to a federal default.
But because of the city’s continued relatively stable economy and because the federal debt crisis has been resolved, the threat was averted.
Bolstering bond agencies view of the city’s financial stability were also several proactive steps that the city successfully undertook to avert downgrading. One of the steps taken was the Seattle City Council’s approval of an adjustment made to interest rates paid on new contributions to the city’s pension fund. Modifying the interest rate was an important step toward maintaining the system’s continued sustainability. In addition, increased contributions on the part of the city and its employees have underscored the strength of the city’s pension system.
When the City Council voted on the city’s 2012 Budget in November, councilmembers took another proactive step. They voted to adopt a new policy that will shore up the Rainy Day Fund, which was used and somewhat depleted to cover shortfalls in lean times. The city now has in place a policy that will serve to replenish that Rainy Day Fund and keep it stronger in the future. Councilmembers deemed that it was time to take that step to ensure that the city will have funds to keep city services strong even in lean times.
The work to repair the Rainy Day Fund with provisions for automatic annual contributions and added extra replenishment in good times was the right move and one that, apparently, was appreciated by ratings agencies.
Seattle, as a city, and the Puget Sound region as a whole is one of the most dynamic regions in the nation. And now, thanks to confirmation of our high ratings, we will be able to move forward.