There is good news for the city of St. Louis amid improving, but still bleak economic times.
Comptroller Darlene Green announced Tuesday that Moody’s Investors Service upgraded St. Louis’ General Obligation rating from Baa1 to A3, “with a stable outlook.”
Moody’s also upgraded its ratings on St. Louis Municipal Finance Corporation’s outstanding lease appropriation debt from Baa2 to Baa1 for more essential purposes and from Baa3 to Baa2 for less essential services.
In May 2018, the city was downgraded, and the upgrades restore the city’s ratings held with Moody’s prior to that concerning news.
Moody’s reported at that time, “the downgrade reflects the city’s weakened reserve position which will remain challenged over the near term despite recent revenue enhancements and policy changes that seek to rebuild narrow reserves. The competition for city resources will remain outsized over the medium term given the city’s significant reliance on economically sensitive revenue streams and as resources are redirected to support less essential purposes.
“The rating also considers the city’s highly leveraged tax base resulting from elevated debt and pension burdens alongside fixed costs that consume more than 20% of operating revenues.”
But economic tidings have improved, according to Moody’s 2021 report.
Moody’s rating upgrades reflect “the city’s materially improved financial profile following consecutive years of surplus operations coupled with a large, regionally important tax base.”
Moody’s also cites the city’s improved reserves, which can “help mitigate potential challenges resulting from economic downturn or disruption caused by unforeseen events such as the coronavirus pandemic.”
“Strong fiscal management is a team effort. These rating upgrades reflect the steady work we have done as a city to build reserves and strengthen fiscal management,” said Green in a release.
“We are making progress, and we are fortunate that fiscal impacts from the coronavirus pandemic have not been as drastic as we feared. But the job is not complete—we must continue to work together as city leaders to find creative ways to spur development and grow revenue.
Green also announced that St. Louis closed its fiscal year 2021 (on July 1) with an operating budget surplus of $31.9 million.
“The COVID-19 pandemic created fiscal challenges for our city and our region, including hiring issues. While some of those challenges are ongoing, St. Louis is fortunate to have outperformed expectations during the fiscal year,” she said.
Th city accomplished the feat without an increase in total revenue. Green described that as “nearly flat”, with a dip of 0.3% compared to fiscal year 2020).
However, this amount exceeded budget projections for 2021 by $25.2 million. Departmental expenditures were lower than appropriations by $6.7 million, with most departments underspending their appropriation.
City statutes mandate that half of the operating balance ($15.9 million) will be transferred to the city’s Capital Fund. The remainder will accrue to the city’s General Fund reserve.
The solid economic news comes just after the city Board of Aldermen, Mayor Tishaura Jones and Green reached compromise on American Rescue Plan Act (ARPA) direct relief package that brings more than $135 million to St. Louis. This includes:
– $30 million to grow jobs and opportunities across the city, including a hub in North St. Louis to assist small business owners, a small business loan fund, workforce development, and expanding broadband and public Wi-Fi.
– $500 direct cash assistance payments to 10,000 St. Louis families negatively impacted by the COVID-19 crisis.
– $8 million in public health infrastructure to get more people vaccinated with mobile vaccine clinics, vaccine incentives, and community canvasses to meet St. Louisans in their neighborhoods and homes.
– $49 million in direct economic relief, including housing and utility assistance, support for the unhoused, legal assistance, and public benefits navigators to help residents connect with these services
– $11.5 million to address the root causes of crime and improve public safety through increased funding for violence intervention programs and youth programming and jobs to keep youth engaged and safe.