By Daily Press staff
Even though the city is a facing a $7 million budget shortfall this year, its credit is still good.
The City of Santa Monica has once again been awarded the highest possible credit rating by the nation’s three preeminent credit rating agencies. This makes Santa Monica one of only seven cities in the United States to hold AAA credit ratings for general obligation bonds.
As a result of the rating, the city was able to sell its bonds Tuesday at the lowest possible rate, saving taxpayers thousands of dollars.
“These three bond ratings reflect a tremendous vote of confidence by the national financial community in the city of Santa Monica,” said city finance director Mike Dennis. “As a result of these ratings, the city was able to sell public safety facility lease and revenue bonds at the lowest possible rate, which will save the city and the taxpayers more than $40,000 annually in debt repayment.”
The credit rating agencies cited the city’s strong financial performance, as well as a strong and diverse local economy coupled with high income levels, low debt burden, strong financial reserves and financial flexibility, and careful financial forecasting as factors in their rating decisions.
However, the city lost millions last year on revenue from hotel rooms and retail sales, creating a projected $7 million shortfall for this year alone. Municipal services will not be affected for this fiscal year due to the city’s large current budget surplus.
Senior city officials have warned the Santa Monica City Council that revenue shortfalls will continue over the next five years. Depending on the severity of the recession, by 2005 there potentially could be a nearly $14 million difference between the amount of money the city makes in taxes and what it spends on services.
Originally published in the Santa Monica Daily Press print edition on January 17, 2002. Read the original PDF.