Wednesday Feb 11 2009
Despite economy, Folsom earns high bond rating
By: Don Chaddock, The Telegraph
Folsom City Manager Kerry Miller announced Tuesday night that Standard & Poor’s Ratings Services affirmed Folsom’s "AA-" rating on outstanding general obligation bonds and said Folsom’s outlook is “stable." According to a notification letter sent by the rating company, the high level reflects Folsom’s stable economy, historically stable tax base growth, and good financial management. “Folsom has experienced what we consider good financial performance. Although the city posted an operating deficit of roughly $4.5 million in fiscal 2008 after transfers, it still maintained a current unreserved fund balance of $12.2 million or, in our view, a very strong 18.9 percent of expenditures," the letter stated. Standard & Poor’s noted that the city would have approximately $9.7 million in its unreserved fund balance, a strong 13.7 percent of expenditures. The rating agency also noted Folsom’s plans to have a balanced budget and that it does not plan to spend the unreserved fund balance. “This rating is very significant, especially in the face of the serious economic downturn that we are experiencing,” said Miller. “It is very rewarding to have Standard & Poor’s affirm our bond rating and our strong management practices. The rating is an indication of the stability of services provided and prudent policies adopted by the City Council.” Mayor Steve Miklos said the city is better positioned than other municipalities and the rating confirms it. “The average Folsom resident can appreciate this bond rating because not one penny of their taxes will go up because of it," Miklos said. "As (Finance Director) Jim Francis mentioned, we have some participation bonds out there. ... Some of these instruments are similar to adjustable rate mortgages, if you will, and they can change with your bond rating." Miklos said the rating is important in light of the current economic environment. "We continue to make sound financial decisions for long terms goals and we don’t react to spikes and valleys," he said. "From a financial picture, that is one of the best (indicators) that the city is not just in great shape, but in really great shape." Vice Mayor Jeff Starsky said the rating was important, especially now. "This is huge," Starsky said. "Unfortunately, this is just one more thing you won't read about in our local media." He thanked the staff for their hard work and applauded the rest of the council for their diligence in maintaining the reserve fund.