Mayor Brian P. Sullivan (File Photo)
WESTFIELD – Standard and Poor’s Global Rating affirmed its ‘AA’ long-term rating with a stable outlook for the City of Westfield in a report to the city this week.
In the summary, S&P stated that “the rating reflects our opinions of Westfield’s adequate economic indicators that continue to grow, supporting positive budgetary performances that has led to stable reserves.”
Mayor Brian P. Sullivan said the rating has stayed the same for at least the last five years. “It’s a strong indication of our stable financial outlook. Obviously, we’re doing very well,” Sullivan said.
The S&P report said the rating reflects their opinion in several areas. They cited “strong management, with good financial policies and practices; strong budgetary performance, with a slight operating surplus in the general fund and an operating surplus at the total government fund level, and very strong liquidity, with total government cash at 34% of total governmental fund expenditures and 7.5x government debt service, and access to external liquidity we consider strong.”
Sullivan said S&P studied the city’s debt and how they pay their bills, and considered the 5% in stabilization and new growth coming into Westfield in their rating.
S&P also gave high marks to Westfield’s tax payments, which are continuously at roughly 98%.
“People are paying their bills,” said the Sullivan.
The report also noted an anticipated expansion of the tax base due to a number of recent commercial and industrial investments; and to host community agreements the city has signed with two marijuana facilities for 3% of gross revenues in impact fees.
“With these ongoing developments, we expect Westfield’s tax base will likely continue to expand and provide a growing revenue source to the city,” the report said.
The only credit weakness cited in the report is Westfield’s large pension and OPED obligation without a plan in place to sufficiently address it. In 2018, the year studied, required pension and actual OPEB contributions totaled 10.8% of total government fund expenditures. The report recommends that Westfield take meaningful steps to mitigate pension and OPED liabilities.
“We believe large, growing pension and OPEB liabilities could provide budgetary stress,” stated the report.
“The only concern is the OPEB liability,” Sullivan said, adding, “They would like to see us get into a longterm solution. We’ve been addressing that. There is over $800,000 in the OPEB account presently. There was only $50,000 when I started. That’s their only suggestion,” Sullivan said.
“We budget and pay for it. We have debt and the resources to pay for it. We never bond for more than we can afford. All of these factors come into it. Our outlook is stable – to the mayor and the financial world, that’s a very good word,” he said.
Sullivan said the healthy financial report allows the city to do projects that annually they couldn’t do. He said the community should know that, because they’re a part of the stability.
Westfield Treasurer Matthew Barnes said S&P rates the city when they bond. He said they have had two rating this year for bonds for water projects.
“We maintained the rating we had in June, and the rating we had the year prior,” Barnes said.
“When they say ‘stable outlook,’ they don’t expect our rating to change within a two-year period,” Barnes added.
“I’m proud that the four years under my administration we’ve maintained an AA rating, and it’s supported by the financial world that we have good financial management practices and we’ve maintained our fiscal responsibility,” Sullivan said.
“As chair of finance, I am pleased with where the City stands financially. For the last two years, the finance subcommittee has worked hard to be financially responsible while maintaining city services,” said Brent B. Bean, II, who chairs the Finance subcommittee, in response to the report.
“That said, our budgets are tight, but investment in our existing facilities needs to become a greater priority, and we need to find non-local sources, meaning state and federal grant programs, to meet these needs,” Bean said.
