Texas Border Business
BROWNSVILLE, Texas – The bond ratings from Standard & Poor’s (S&P) and Moody’s Investors Service were released last week with the final credit opinion provided January 24, 2022. The ratings were reaffirmed at “AA” and “Aa3,” respectively. Both firms shared several positives on the city’s financial performance. The following is an excerpt from Moody’s: “Management budgets conservatively and recent policy changes in which one-time revenue fluctuations, expenditure savings, or surplus reserves are allocated to the Capital Improvement Plan (CIP) and/or capital needs will provide for continued reinvestment in city infrastructure.” This affirmation is testament to the city’s strong financial position supported by its financial policies and practices. Overall, the ratings demonstrate the firms’ confidence in the City of Brownsville despite financial pressures occurring globally.
The strides made have proven to be extremely beneficial. The city, according to S&P, has continued to achieve positive general fund results, with unaudited results for fiscal year 2021, showing a large surplus driven by better-than-budgeted sales tax collections.
Additionally, Moody’s Investors Service Credit Opinion states, “The city’s status as the regional economic center, improving cross-border trade, expansion at the Port of Brownsville, and strong commercial enterprise development will continue to drive modest annual expansion.”
On receiving the rating, City Manager Noel Bernal stated, “These excellent and stable ratings allow for the City of Brownsville to continue making progress on critical infrastructure investments that benefit our overall community as prioritized by our Mayor and City Commission. We are proud to see our financial management practices recognized by two of the leading ratings agencies.”
Additionally, the AA rating from S&P also reflects the firm’s view of Brownsville’s:
- Status as an important port of entry for international trade and commerce, with the presence of the University of Texas-Rio Grande Valley having a stabilizing effect on the local economy.
- The city’s property and sales tax bases continue to grow, portraying income and property wealth metrics remain below average and a limiting credit factor.
- Very strong management, with strong financial policies and practices under the firms’ Financial Management Assessment (FMA) methodology and a strong institutional framework.
- Sizable fiscal year 2021 general fund surplus and federal stimulus funds allowing for one-time capital investments while maintaining a very strong fund balance above the city’s 90-day fund balance target.
Moody’s listed mission is to provide trusted insights and standards that help decision-makers act with confidence. They are a global integrated risk assessment firm that empowers organizations to make better decisions. Their data, analytical solutions. and insights help decision-makers identify opportunities and manage the risks of doing business with others. Moreover, S&P Global Ratings provides high-quality market intelligence in the form of credit ratings, research, and thought leadership.
