Fitch Ratings gives Paso Robles AA rating
City’s economic outlook is stable, report says
Fitch Ratings has affirmed Paso Robles outstanding bond obligations as AA rated. The new rating report is for $28.6 million in general obligation bonds. The Fitch report says the city’s rating outlook is stable. The bonds are general obligations of the city, payable from taxes levied within the city.
The city’s solid financial position has shown consistent growth following an economic downturn, the report says. City finances benefit from conservative budgeting, proactive financial planning, active expenditure management and the recent adoption by voters of a temporary half-cent sales tax, it says.
The report notes that the Local economy is largely centered on wine production and tourism, with a growing presence of biotechnology and software engineering concerns. Wealth levels and unemployment are comparable to the national averages, it says.
The city’s overall debt levels are low and amortization is rapid, the report says. Pension costs will likely rise over the next several years, subject to future state legislative action, to address unfunded liabilities, it says.
Additional notes from the Fitch Ratings report:
The city has demonstrated consistently strong financial performance, due largely to active expenditure management and conservative budgeting and planning. The city was able to manage costs well during the recession through the elimination of discretionary spending and the reduction of general fund full time equivalent staffing by 35% through frozen positions and retirement incentives. As a result, the city was able to close a structural imbalance in fiscal year 2011 that was created in fiscal years 2009 and 2010. The city has been adding back positions in the time since.
The city is projected to finish fiscal year 2014 with a modest operating surplus after transfers. Four consecutive fiscal years of surpluses, in addition to a fund balance reclassification in fiscal year 2011, are projected to bring total general fund balance to a very strong $17.1 million, or 65.2% of spending, in fiscal year 2014 from $10.7 million, or 40.7% of spending, in fiscal year 2011.
The preliminary fiscal year 2015 budget shows another modest surplus and the city’s five year forecast shows continued structural balance. Fitch considers the city’s projections to be reasonable given conservative assumptions for the city’s collection of sales and transient occupancy tax revenues and a recently passed half-cent sales tax measure that will relieve some pent-up capital spending pressures on the general fund.
Source: Business Wire