Standard & Poor's Ratings Services said it upgraded its long-term rating on Amherst, Mass.' general obligation bonds to AA-plus from AA based on the town's strong budgetary performance and strong budgetary flexibility, further bolstered by its strong management conditions.
The outlook is stable.
At the same time, Standard & Poor's assigned its AA-plus rating, and stable outlook, to the town's series 2014 GO bonds.
Amherst's GO pledge secures the bonds. Proceeds will be used to finance sewer system improvements within the town, as well as to finance other capital projects and capital equipment purchases.
The rating is based on the following factors for the town: an adequate economy, with access to the broad and diverse Springfield metropolitan statistical area (MSA), and anchored by the University of Massachusetts-Amherst; very strong budgetary flexibility, with 2013 audited available reserves at 13.4% of general fund expenditures and a demonstrated willingness to raise property taxes; strong budgetary performance on a total governmental funds and general fund basis; very strong liquidity, providing very strong cash levels to cover both debt service and expenditures; very strong management conditions led by good financial policies; and a very strong debt and contingent liability position characterized by low debt service as a percent of total governmental funds expenditures.
"The stable outlook reflects our expectation that Amherst's continued good fiscal management will allow the town to maintain strong general fund reserves commensurate with its formal policy throughout the economic cycle," said Standard & Poor's credit analyst Timothy Daley. "Moreover, the town's stable economy and diverse property tax base should allow for revenues to remain strong and consistent," Daley added.
The rating agency believes management will continue to mitigate the effects of Amherst's long-term liabilities in addition to the town continuing to maintain balanced operations and strong reserves. As a result, it does not expect to change the rating within the two-year outlook time frame. While not likely, if management is unable adjust revenues and expenditures accordingly to maintain a balanced budgetary performance, and budgetary flexibility declines significantly as a result, the rating could be pressured.
