Saturday, May 28, 2005

My Little Town

I've lived in Baltimore all my life. In my experience, at least, Baltimore has always had a municipal inferiority complex, poorer and less sophisticated than its neighbors to the north (Philadelphia and, especially, New York) and hte south (Washington, D.C.). However, there is clearly a renaissance underway.

Yesterday, the Fitch bond rating agency rated Baltimore's general obligation bonds A+ while raising the general outlook to "Stable" from "Negative". (Free registration required.)

The rating is based upon:
Maryland's (the state) continuing support of city revitalization resulting in tax base growth and stabilized population decline, as well as the city's conservative budgeting practices, moderate debt levels, and its demonstrated ability to deal with ongoing fiscal pressures. General fund operations are tightly balanced, although reserves continue to grow incrementally. The city is undergoing an aggressive plan to revitalize several of the neighborhoods surrounding the successful downtown redevelopment and this effort is likely to lead to continued private investment within the city. Debt levels are moderate, largely as a result of city action to limit borrowing to an affordable level. Capital needs are fairly sizable mostly for water and wastewater projects given the age of Baltimore's infrastructure and are payable from rates and charges on the system's users which extends beyond the city limits.

Baltimore's financial management is excellent, contributing to the steady buildup of reserves over the past decade, even as the city sustained major population and employment losses. The city's more active participation in the management of its school system may prove to be of long-term benefit to the city if it succeeds in instilling tighter fiscal discipline and improving academic achievement, both of which appear to be occurring. The city made an emergency loan to the school system during fiscal 2004 equal to $42 million, or 75%, of its budget stabilization reserve to alleviate cash flow problems.
I wonder whether the changes ongoing in the city will be reflected on The Wire.

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