The Emporia City Commission received a favorable financial report for the city during a study session Wednesday morning.
Greg Vahrenberg, managing director for Raymond James Financial, said the city had earned another A+ rating from Standard & Poors Global Ratings. That gives the city a favorable outlook for bond financing and budgetary performances.
“The perfect scenario for the city is, you are paying down your indebtedness and also have a declining amount of fiscal balance each year,” he said. “Then, if you get five years out and have a project or a need in the city — if you have flat debt service, outstanding balance, or in the worst case scenario, an increasing balance — then when you finance that new project, you’re layering on top of it and creating a future spike or piling onto a spike that has been building for years.”
Vahrenberg said there were a few factors that go into S&P ratings, including local economies, debt-to-income ratios and median income. The City of Emporia was rated as having a “very weak economy” based on those projections — a point of contention for commissioners and city management.
“We are in a very favorable position,” City Manager Mark McAnarney said. “We have paid down a lot of general obligation debt. We do have some debt for our water plant and wastewater systems, which we will continue to do because we want to constantly reinvest in our infrastructure. Overall, when we’re rated, we’re rated very well. Most rural cities, away from the suburbs, have an uphill challenge because the suburbs are doing so well. Our economy is doing very well.”
McAnarney said it was important to keep increasing the city’s per capita income, which is currently 67.5 percent of the national level and a per capita market value of $37,871. The city’s market value grew by more than 4 percent to $921.5 million over the last year.
“As crazy as it sounds, a lot the growth is in the suburbs,” he said. “If you’re a growing suburb that’s adding 10,000 - 15,000 people a year, like some of the suburbs do in the bigger cities, those are more of the highest rated communities. They look at per capita income, population growth, they look at a lot of different factors. But overall, we show very well.”
Vahrenberg said the city should not get hung up on the weak economy distinction because, overall, the city was in a better position that many others in the state.
Currently, the city would be able to take on a little more than $22 million in bonds for general obligation projects without increasing its current payments. Additional bonds for water and sewer projects could also be taken with the same result.
“I think you should be very proud of your local economy,” Vahrenberg said.
Commissioners also looked at the first draft of the 2020 budget and some projections for the city’s five-year-plan. Some of those discussions focused on redistributing funds to different line items, such as funding Emporia Enterprises at $25,000 rather than the requested $40,000 and putting that $15,000 into the land purchasing fund instead.
The commission will continue budget discussions in the coming weeks.
McAnarney said he was confident the commission would continue to make decisions that keep the city moving forward.
“We are very positive as we do the five-year-plan,” McAnarney said. “We have good cash position [and] we’ve paid off a lot of our debt. We can take on some projects without increasing the mill levy in our bonded interest fund, which is exactly where we want to be.”