Trussville Mayor Buddy Choat says he is "hopeful" bond rating company S&P Global will reconsider the language in its initial report on the city.
As first reported by the Trussville Tribue, "S&P Global has lowered its long-term general obligation warrant rating for the City of Trussville from 'AA+' to 'AA,' citing budget deficits and declining reserves."
The report states:
“S&P Global Ratings lowered its long-term rating on the city of Trussville, Ala.'s general obligation (GO) warrants to 'AA' from 'AA+'.
“S&P Global Ratings also lowered its long-term rating on the Public Building Authority (PBA) of Trussville, Ala.'s lease revenue bonds series 2022-A and 2022-B, issued for the City of Trussville to 'AA-' from 'AA'.”
“The outlook is negative.”
The ratings reflect the application of our "Methodology For Rating U.S. Governments" criteria, published Sept. 9, 2024.
"The downgrade reflects a multi-year trend of deficits, partially driven by capital expenditures, but also reflecting what we view as imbalanced operations, which resulted in sustained draws on reserves that are no longer comparable with 'AA+' peers," said S&P Global Ratings credit analyst Karolina Norris.
The negative outlook reflects our view that reserves are likely to decline further given an expected fiscal 2024 deficit, budgeted deficit for fiscal 2025, and the lack of concrete plans to balance operations and replenish reserves in a timely manner absent one-time revenue sources.
Mayor Choat told the Tribune, "[T]he city was able to submit its response to the findings last week and that it would be taken before the committee for review."
Choat said they are not expecting the city's rating to be readjusted, but they hope to see some of the language used in the report corrected and that the downgrade to AA, which is still considered high-grade, should not change anything for the city.
"AA rating is still very good. As we know, most of our bonds in the past were always done on an AA, so a lot of cities would love to have an AA rating," Choat said.
In defense of the changes, Choat told the Tribune, "The city is making an effort to try to make up the deficit by the end of the fiscal year, including cutting department budgets and holding back on city projects, which were not reflected in the report."
Choat said they are not surprised that the City's rating dropped, given last year's budget deficit, but are taking issue with some of the language used in the report, including the claim that there are no long-term plans to address the declining reserves.
According to the mayor, after receiving the initial report from the firm, the city was not allowed to submit a response to the findings before the report was brought before the committee for review, which he said was "very unusual."
"The biggest thing we had was we didn't get a chance to respond once we saw their letter, and for them to say the outlook is negative was concerning to us because we felt like we have some things in place," Choat said.
"Our disappointment in the report came mainly from the language that they talked about how it appeared that the city was continuing this trend and that reserves would continue to drop with no concrete plans in there."
Choat has announced that he will not run for reelection in the 2025 municipal elections, which will be held on August 26, 2025.
According to the Cahaba Sun, Lisa Bright, president and CEO of The Will Bright Foundation, and Ben Short, a former police officer, a current council member and local business owner, said they want to continue the successes of past government leaders.
Apryl Marie Fogel is a Birmingham resident who frequently appears on and guest hosts radio programs around the state. She can be reached at [email protected] or on X and Facebook at @aprylmarie.
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