A recent downgrade of some Surprise, Ariz., municipal bonds provided ammunition for mayoral candidate Sharon Wolcott’s campaign against incumbent Lyn Truitt in the election on Nov. 8.
Fitch Ratings in September lowered its rating on a 2003 series of wastewater revenue bonds issued by the Surprise Municipal Property Corp. to AA-minus from AA, with a positive outlook.
“The accounting horrors on Lyn Truitt’s watch continue,” said Wolcott. “This could make it tougher for the city to pay its bills.”
In a recent debate with Wolcott, Truitt said the city is working to restore the AA from Fitch. He noted that Standard & Poor’s reaffirmed the city’s AA in August and said most of the Phoenix suburb’s long-term financial problems occurred before either he or Wolcott, a former council member, took office.
“One of the things we’re doing is being fiscally responsible,” he said. “We have very low debt. We’re showing ourselves to be very conservative, very solid.”
Surprise’s chief financial officer, Scott McCarty called the action by Fitch “a slight downgrade.” In the report, Fitch analysts said changes in state law may restrict the way cities can use development fees to pay for capital projects.
The report also cited a drop in reserve funds below the target of 60 days of operations due to declines in tax revenue and corrections of earlier financial reports.
“Clearly, these are factors which led to the slight downgrade to AA-minus,” McCarty said. “It is significant that Fitch recognizes our strengthened financial management and plans to rebuild our fund balances.”