Indy's improving finances earn it outlook upgrade
Indianapolis' growing record of keeping its finances structurally balanced has earned the city an outlook upgrade from Kroll Bond Ratings Agency.
Kroll raised the outlook to positive and affirmed its AA-plus rating on the city, saying that the city’s financial position continues to demonstrate an ascending trajectory.
“Indianapolis has continued to post improved financial results and, in recent years, has reversed a historical pattern of structural deficits in its General Fund,” Kroll said.
The upgraded outlook comes after the city-county council approved Indy Mayor’s Joe Hogsett's third annual budget on Oct. 15. The budget totaled $1.2 billion, an increase of 4% from the fiscal 2018 budget and the second consecutive structurally balanced budget. As in 2018, the budget does not rely on any reserve draw-down and estimates a small operating surplus and an $80.8 million Fiscal Stability Fund balance.
“In its budget for FY 2019, the city continues to forecast structurally balanced operations by extending its conservative revenue projections, diversifying its funding sources and holding the line of expenses,” said Kroll.
Kroll said that the city has managed to reduce the strain on its general fund operations while increasing overall financial transparency by establishing dedicated revenue sources to fund capital improvements.
Indy has budgeted more than $650 million in capital improvement spending between 2019 and 2022. The city’s storm water projects are funded through capital and debt. The city’s transportation projects, including bridges, streets, and streetlight repairs, are funded from a mix of funds and community grants generated from the state gas tax and matching funds, local funds such as the COIT reserves and external funds such as federal aid.
Kroll rates the city’s general obligations one notch lower than the city’s triple-A marks from Fitch Ratings and Moody’s Investors Service. S&P Global Ratings rates Indianapolis AA after downgrading its AAA rating in 2013.
Total direct debt and overlapping debt for the consolidated city/ Marion County government totals $1.2 billion.
As of Dec. 31, 2017, the City had $135.8 million of GO debt outstanding and another $867.4 million of debt backed by the city’s moral obligation pledge.
The Bond Bank serves as a conduit issuer and provides access to the capital markets for qualified entities, including the city, Marion County, all special taxing districts of the City and County, and all entities whose tax levies are subject to review and modification by the Council and certain authorities.