Moody’s Investors Service and Fitch Ratings both reaffirmed the City of Sierra Vista’s outstanding bond ratings last week, citing effective debt management, ample reserves, a relatively low long-term liability burden, and a sound approach to budget management that helped the City weather an economic downturn.
In its supporting comments for a reaffirmed rating of Aa3 last week, Moody’s said “The credit position for Sierra Vista is healthy …. The key credit factors include a healthy socioeconomic profile and tax base, and stable financial position.”
Fitch Ratings called Sierra Vista’s financial outlook “stable” on Friday, in a press release announcing its reaffirmed rating of AA-. Despite increases in pension liability tied to the state’s Public Safety Personnel Retirement System, Sierra Vista’s long-term liability burden remains low, according to Fitch.
“Reserves are ample, and combined with the city’s sound budget management practices, ensure maintenance of very strong financial resilience through a business cycle,” Fitch Ratings said. “The city, through its sizable expenditure flexibility, has adjusted to a weakening revenue environment and successfully maintained a sound overall operating profile.”
The City began preparing for the impacts of a nationwide economic downturn early, realizing savings through attrition that prevented any need to make layoffs later on. Fitch notes that since 2009, the City has reduced its workforce by 20 percent. This proactive approach to personnel costs has enabled the City to maintain a favorable financial outlook despite a weaker revenue profile following the recession.
The City’s conservative approach to debt management was also cited by both Moody’s and Fitch as a highly favorable factor. “The city has a manageable debt liability, which is favorable relative to the assigned rating of Aa3,” Moody’s says in its comment. The City’s practice of maintaining healthy debt service levels and paying off bonds early helped to balance a pension burden that has increased for cities throughout the state.