Sat Feb 11 2012
by Laura Freeman
Reporter
Hudson -- After six years of being second, the city has earned the top credit rating of Aaa.
"Aaa is the premiere rating and something to be proud of," said Hudson Finance Director Jeff Knoblauch.
Knoblauch said he knows of a few other communities with the Aaa rating -- Westlake, Solon and Columbus.
"In today's market, a triple A rating is more important," said Council President David Basil.
Cities with the Aaa credit rating can get lower interest rates on loans, Knoblauch said. Ratings help investors analyze risks when buying bonds for long-term loans for city projects.
Mayor William Currin said the city has been striving for the highest rating for more than 12 years.
"It's so very significant," Currin said.
The city has had an Aa1 rating since 2004, and an Aa2 rating before that since 1999, Knoblauch said. Council and city staff have worked to improve the rating by increasing its reserve fund and making cuts when revenue decreased.
"It's important now more than ever with all the economic downturns, Knoblauch said. "It's more difficult to achieve an upgrade. A lot of communities are being downgraded."
Moody's Investors Service, a global credit rating agency and one of three in the U.S., rated the city's debt using financial information such as the city's annual financial report, five-year plan, audit statements, staff discussions about the city's budget and management practices, Knoblauch said.
"They ask how the city is doing in actual versus budget numbers and look at the city's reserve funds," Knoblauch said. "It comes down to the ability to repay your debt."
Higher cash reserves, strong management practices and conservative budgeting result in a better credit rating, Knoblauch said.
The rating comes at a time when a lot of cities, counties and states are having financial difficulties, Knoblauch said. They are laying off employees, significantly reducing their budget and cutting programs.
"We've been able to avoid taking such dramatic steps because Council and the management staff have exercised budgetary constraints for several years, been very conservative and preserved our reserve fund balance," Knoblauch said. "We've avoided making dramatic cuts."
In 2008 when the city noticed a decline in income tax, it made a 5 percent cut in spending.
"We took immediate action to cut expenses so we didn't eat into reserves," Knoblauch said. "The challenge now is maintaining the rating."
E-mail: lfreeman@recordpub.com
Phone: 330-688-0088 ext. 3150
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