Moody’s Investors Service has raised the City of Rio Rancho’s GOULT (General Obligation of Unlimited Tax Liability) rating from Aa2 to Aa3, translating into savings for taxpayers.
Strong financial performance and improved financial policies earned the upgraded rating, according to a city press release.
“Bond or credit ratings are a way to gauge an organization’s financial well-being, and ratings can affect how the city borrows money,” the statement said. “Additionally, investors use bond ratings as a risk assessment tool to invest in and buy city bonds.”
This rating indicates that the city is a highly desirable and more financially sound investment for investors. The city can then get better terms for the bonds, saving money and having more funds available for services.
“During the pandemic, under the direction of city staff, I sponsored a resolution to increase our reserve levels to 25% and also advocated for voters to have the option of creating a permanent fund, which attracted strong community support,” the mayor said. Gregg Hull in the release. “Thanks to these fiscally responsible policies, we will now be able to invest more of our tax dollars in municipal services instead of paying banks interest on our debt.”
The reason noted for Moody’s upgraded rating stems from city policy increasing cash reserves from 15% to 25% during the pandemic due to the uncertain economic outlook, according to the city. Additionally, Moody’s noted that the city’s creation of a permanent fund, which was approved by voters in March, was another reason.
Other factors that led to the upgrade include Rio Rancho’s large, growing economy, which will benefit from Intel Corp’s major expansion, according to Moody’s. and a manageable debt burden supported by rapid principal amortization. Moody’s noted that pension liabilities are high, but should benefit from recent legislative reform by the Public Employees Retirement Association.