Galveston, TX – September 14, 2020 – Fitch Ratings affirmed the City of Galveston’s solid ‘AA’ credit rating, reflecting the city’s healthy operating reserves and reasonable debt burden, and its resilience to current and future economic downturns amid the Coronavirus pandemic.
Rating agencies are reassessing financial ratings because of the general economic instability caused by the ongoing Covid-19 pandemic. Despite uncertainties in the economy, the agency maintained an ‘AA’ rating for Galveston. The assessment is driven by the city’s post-pandemic revenue growth prospects and the city’s demonstrated financial resilience, the agency said.
The rating applies to the city’s outstanding obligations, including $140 million in general obligation bonds, public improvement bonds, and certificates of obligation, as well as $20.6 million in hotel occupancy tax revenue refunding bonds for the convention center.
City Manager Brian Maxwell said, “Fitch’s rating recognizes the City’s efforts to address public safety funding needs with recent reforms to both the firefighter and police plans that should satisfactorily address this issue. The rating also reassures concerns that the long-term bonds issued since 2017 are affordable and the City’s operating costs are being managed within the limits of revenue growth. This is based on the City’s demonstrated ability to manage its operating costs and staffing within available revenue.”
The ratings agency stated that the city has a moderate long-term liabilities burden compared to its size, resource base and likely expansion of the city’s population and personal income as a whole. The agency reported a stable outlook for the City of Galveston.
The rating reflects the city’s strong financial standing, and the strength of the local economy’s primary areas, including tourism, healthcare and maritime industries. The ratings firm anticipates the city’s pace of spending to grow in line with revenues, the report said. The city’s current five-year financial forecast, which incorporates employment and economic forecasts from regional and federal sources, appears realistic and should assist management efforts to respond promptly to changing circumstances while maintaining this resilience cushion, the agency stated.