Omaha's Financial Prowess Shines Through Bond Ratings
Overview of Bond Ratings
S&P Global, in their recent review of Omaha's 2023 financial condition, assigned an AA+ rating with a stable outlook. This is the second highest rating bestowed upon the city, highlighting its financial stability and growth potential. Moody’s Investors Services, on the other hand, gave Omaha its third highest rating of Aa2 with a stable outlook on the General Obligation Bonds. Such high ratings are a testament to the city's sound financial management.
The City of Omaha, in a statement released on Thursday, attributed these high ratings to Mayor Stothert's leadership. Her strong financial management, conservative budgeting, and focus on business and job growth have played a crucial role. Additionally, the recent voter-approved General Obligation bonds and the sizable reserve accounts have also contributed to the favorable ratings.
City's Cash Reserves
One of the key factors contributing to Omaha's high bond ratings is its healthy cash reserve funds. Currently, the city's cash reserve funds stand at a substantial $70.5 million, a significant increase from the $11 million when Mayor Stothert was elected. This financial cushion provides stability and reassurance to investors, indicating the city's ability to weather economic uncertainties.
The growth in cash reserves is a direct result of the city's prudent financial policies. Mayor Stothert's leadership has focused on maintaining a strong financial position, which has allowed the city to build up these reserves over time. This not only enhances the city's creditworthiness but also provides a safety net for future projects and initiatives.
Challenges and Areas for Improvement
While Omaha's bond ratings are impressive, both rating agencies have pointed out areas that need attention. The underfunded pensions, in particular, have been a concern. The S&P report highlights the reluctance of Omaha's labor unions to contribute their actuarially determined contributions, which continues to constrain progress in reducing unfunded liabilities.
For instance, the Police and Fire Pension Fund is currently at 56% funding, and the Civilian Pension Plan is at 51% funded. Despite Mayor Stothert's efforts to recommend funding plans to return these plans to full funding, there is still work to be done. Addressing these pension issues will be crucial in maintaining Omaha's financial health in the long run.
Impact of Bond Ratings on Growth
Strong bond ratings are not just a matter of pride; they have a significant impact on Omaha's growth and momentum. As Mayor Stothert stated, "Strong bond ratings are critical to maintain Omaha's strong growth and momentum." These high ratings attract investors and enable the city to access capital at favorable rates, which can be used to fund infrastructure, public safety, and public facility projects.
For example, the voter approval for General Obligation Funds has opened up new opportunities for the city to invest in projects that will enhance the quality of life for its residents. From improving public safety infrastructure to upgrading public facilities, these funds will play a vital role in driving Omaha's continued growth and development.