All three major bond rating agencies – Standard & Poor’s, Fitch, and Moody’s – have given the City of San Antonio their highest rating, AAA, as they have for the past eight years.
San Antonio is the only U.S. city with more than 1 million residents to achieve a “AAA” rating from any of those agencies. The higher the bond rating, the lower the interest entities have to pay when borrowing funds – essentially making infrastructure projects cheaper.
In statements sent out by the City, the agencies cited San Antonio’s “revenue flexibility,” “financial resilience,” and “strong financial policies and practices” among the reasons for their rating. Fitch and Standard & Poor’s added that if voters approve changes to the City’s charter in the November election, it could jeopardize San Antonio’s bond rating.
Those changes, brought to the ballot by petitions created by the local firefighters union, would restrict the salary of future city managers, limit the City’s ability to negotiate with the union, and make it easier – some would say too easy – to get future petitions onto ballots.
The fire union is suing the City for an alleged violation of First Amendment rights during the signature collection process for its petitions and refuses to negotiate a new contract.
Meanwhile, the State Legislature has made several attempts to cap city revenues.
“I’m extremely proud of this accomplishment, especially in the face of so many external challenges,” City Manager Sheryl Sculley stated in a news release. “To have done this again and again is a testament to our City team’s commitment to the community and San Antonio’s financial security.”
City Council is expected to officially place the fire union’s initiatives on the ballot this month.
“[Those items] have the potential to greatly limit the city’s revenue and expenditure flexibility and interfere with management’s ability to operate the city,” Fitch stated. “Successful passage of these petitions, particularly those that make any ordinance subject to referendum and allow the firefighters to require binding arbitration, would lead to negative rating pressure should the city be unable to effectuate effective responses.”
City officials have also said the so-called San Antonio First initiatives could impact the bond ratings of CPS Energy and the San Antonio Water System, the City-owned utilities.
“[Sculley] and her finance staff have worked diligently with City Council to continue our legacy of fiscal stewardship,” Nirenberg stated. “The end result saves millions of tax dollars and allows us to provide more direct services in a cost-effective manner. Unfortunately, the fire union’s proposed charter amendments could put our bond rating in jeopardy.”