Borough bond rating steady

PALMER — Though some have worried that recent depletion of Mat-Su Borough emergency funds could harm its bond rating, newly issued ratings from two leading rating agencies show no decline.

“That’s erroneous,” Mat-Su Borough Manager John Moosey said Monday afternoon of a question about whether the borough’s bond rating was downgraded recently. “Standard and Poor’s and Fitch rated us the same, we have not gotten Moody’s yet.”

Standard and Poor’s gave the borough an AA+ and FitchRatings an AA. Those have been the borough’s credit ratings since 2010 when the borough was upgraded to AA from AA- by FitchRatings.

Moosey said that he understood there was some concern over the borough’s bond ratings and what might happen to them this year.

“Cash is king these days and we used some of our cash on projects,” he said.

But the borough has a lot going for it.

“Our debt is not overextended and we do have the 25 percent policy on reserves,” he said.

Moosey came to the borough in May 2011 fresh from a gig as a city manager in Minnesota. He said that compared to other communities, the Mat-Su Borough has its fiscal house in order.

“Coming from Minnesota and seeing other communities and those sorts of things, we’re doing very well here,” he said.

Bond ratings are important to government bodies that seek to borrow money through the sale of bonds.

The ratings determine how much interest the borough will have to pay on the money. Given that municipalities tend to borrow money in chunks ranging into the hundreds of millions, even small increases in interest payments can get expensive quick.

Back in March, the last time the borough was rated, it was beginning the process of selling $103 million in bonds. At that time, the borough issued a press release touting the ratings and explaining what they would mean compared to the previous.

“With the three agencies confirming and assigning our current ratings, it will save the taxpayers of the Borough and the State itself an estimated $3.5 million to $4 million over the life of the bonds,” borough finance director Tammy Clayton, said in the press release.

Bond ratings made national news in August 2011, when Standard and Poor’s downgraded the United States for the first time in the government’s history. The company seemed to be reacting to political gamesmanship over raising the national debt limit. In that change, the federal government went from an AAA to a AA+, the same as the borough’s current rating with that agency.

Contact reporter Andrew Wellner at andrew.wellner@frontiersman.com or 352-2270.