Photo by ssteege1.Mayor Vince Gray is in New York today. No, not to press HBO executives on commissioning a series about D.C. statehood or even to brag about TBD’s (somewhat specious) list of reasons why Washington is better than the Big Apple.
Gray is running around Lower Manhattan today visiting all three major credit-rating agencies, lobbying for an increase in the District’s municipal bond ratings, which affect the interest rates the District must pay on its debt, and which have been unchanged since 2009.
Currently, D.C.’s general obligation bonds are rated A+ by Standard & Poor’s, Aa2 by Moody’s Investors Services and AA- by Fitch Ratings Inc. The Moody’s rating is the third-highest issued by that company, but last year, citing local exposure to any downsizing of the federal workforce, it downgraded its outlook on the District from stable to negative. The S&P and Fitch assessments are a bit further down the chart, but still good enough to rate the District’s bonds an upper medium grade investment.
But overall, the credit agencies have viewed the District as a good financial steward in recent years, which is why Gray, along with other D.C. officials, are visiting them today. The District’s pocket ace, the Examiner’s Alan Blinder writes, is the news earlier this week that D.C.’s fund balance—the city’s savings account—is now worth more than $1 billion, enough to run the government for 33 days.
Writes Blinder:
The uptick in the fund balance is a part of Gray’s effort to build an emergency reserve that could keep D.C. government functioning for two months without any tax revenue. Eric Goulet, Gray’s budget director, said he expects such contingency planning will impress financial opinion makers.
“We’ve made commitments to Wall Street that we intend to get to the two months’ cash on hand,” Goulet said. “It’s really going to [help] us in terms of our ratings.”
It probably also doesn’t hurt that in the same announcement, Gray said the District finished 2011 with a $240 million budget surplus. While some, like the D.C. Chamber of Commerce and Councilmember Jack Evans (D-Ward 2) want the city to use the surplus to offset the cost of rolling back a tax increase on wealthy residents, the D.C. Fiscal Policy Institute have advised the District to add it to the rainy-day stockpile. Yesterday, Gray’s budget director, Eric Goulet, told reporters that by law the money had been directed to the city’s reserves and wouldn’t be available for any spending.
