Fitch Ratings has once again affirmed the City of Midland's top credit rating, noting that the local government entity's rating outlook appears stable, despite the decline experienced by the energy sector.
Conservative budgeting, financial flexibility, and healthy reserve levels were cited as key drivers behind the rating, which was released last week.
Analysts said in the report that they expect the City of Midland to "demonstrate an exceptional strong degree of gap closing ability and financial resilience during an economic downturn based on its healthy reserves, strong expenditure flexibility and high independent revenue-raising ability in relation to potential revenue declines."
During times of economic prosperity, the City of Midland used sales tax funds in excess of one-third of general fund revenues for non-recurring uses, one-time capital improvements, or to enhance fund balance reserves in order to maintain a minimum of 30 percent in reserves, which is slightly above the City's 25 percent fund balance policy level.
The City of Midland has cut $2.8 million from general fund spending to account for the decline in sales tax revenues, which are about 20 percent lower than they were last year at this time. The City's unrestricted fund balance for fiscal year 2015 is currently at $71 million, or 64 percent of expenditures, to provide cushion in the case of further economic decline.
By obtaining the highest issuer credit rating, the City of Midland is able to receive the lowest interest rate possible when selling bonds for capital projects. This in turn allows the City to maintain low property tax rates.###
Media Contact: Public Information Officer Sara Bustilloz