Moody’s: Portland maintains Aaa rating

Fireworks over downtown Portland, July 4, 2013 (Report It)
Fireworks over downtown Portland, July 4, 2013 (Report It)

PORTLAND, Ore. (KOIN) — Despite voicing some concerns the city of Portland was heading down a dangerous financial path, Moody’s confirmed Portland’s Aaa stable bond rating.

“The confirmation of Portland’s Aaa GOULT rating and various related ratings primarily reflects the city’s overall strong credit fundamentals that include its role as a regional center featuring a broad and resilient metro economy,” Moody’s wrote in a report released recently.

“The stable outlook reflects our expectation that recovery for Portland’s economy and tax base will be at least comparable to peers. We anticipate that strong management will act to maintain an adequate financial position at least in line with established operating policies,” the report stated.

A downgrade in bond rating would have made it harder for the city to borrow money. That makes it tougher for the city to build a new bridge or make any other critical investments and that often leads to cities increasing taxes.

Moody’s said Portland’s methods are unusual, but they work — for now.

In April, Moody’s began studying Portland for a possible downgrade in credit rating. In May, the city auditor criticized Mayor Charlie Hales’ decision to eliminate the city’s chief financial officer. In June, a city audit showed that while the city’s financial health is stable, the overall financial position continues to decline.

KOIN 6 News found a city audit released in June that showed for every dollar of property tax collected in 2012, 24 cents is funneled into the fire and police disability and retirement fund. Only 46 cents goes into the general fund.

“The city is expected to continue to fully pay annual pension requirements over the medium term, including the ability to levy sufficient and dedicated property taxes to fully cover FPDR’s annual obligations,” Moody’s wrote in the report.

One challenge Moody’s sees is “General fund reserves below average compared to similarly rated peers.” That could move the rating down if there are declines in the general fund reserves.

Portland spokesperson Dana Haynes admitted there were some who were concerned about the report.

“Some of the elected [officials] and some of us staff were sweating it,” he told KOIN 6 News. “Some of the folks in finance were like, ‘We got this one.’ We’re fine. The city is OK.”

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