The City of Edmonton’s chief financial officer said Wednesday she is very please a major international credit rating agency is maintaining the city’s credit score as it continues to grapple with new challenges brought on by the COVID-19 pandemic.
“We have made many difficult decisions to manage costs during the course of the pandemic, including temporary layoffs, so that we can come out of this with a stable financial picture and the ability to relaunch and reimagine our city,” Mary Persson said in a news release.
Standard & Poor’s (S&P) has maintained the city’s rating at AA for 2020. Edmonton’s S&P credit score has been at AA since last year when the agency downgraded its rating from AA+, citing concerns about the city’s debt burden.
READ MORE: Agency downgrades Edmonton’s credit rating
“The stable outlook reflects our opinion that, in the next two years, the revenue and expenditure impacts stemming from the pandemic-related restrictions will be largely temporary in nature and Edmonton will maintain overall sound financial results and secure the pay-as-you-go funding required under its large capital plan,” reads the latest report from S&P. “This will allow the city to avoid additional debt borrowing beyond current expectations or excessive drawdowns of reserves.
“We also expect that the economy will return to moderate growth in the outlook horizon.”
The report notes that it “could raise the rating in the next two years if Edmonton’s economy became less reliant on the energy sector” and if economic growth translates into “strong revenue generation.”
“Under this scenario, we would expect after-capital deficits to decline consistently below five per cent of operating revenues, and the tax-supported debt burden to drop below 120 per cent of operating revenues,” the report says.
However, the report also warns that “weaker-than-expected economic activity could impair Edmonton’s property tax and user-fee revenues.”
“If this, or an unexpected major spending decision, were to happen while the city is undertaking its large capital spending plan, Edmonton’s after-capital deficits and budget flexibility could weaken further,” the report says. “We could lower the rating as a result.”
The report notes that it believes city managers will continue to make “prudent fiscal decisions” and stay on track with its large capital plan.
Just last month, the City of Edmonton released its plan to bounce back from the ongoing effects of the COVID-19 pandemic and an anticipated $172 million budget impact.
What’s been dubbed the Reimagine Plan will look at ways to continue building a healthy, prosperous city while working to balance the budget, the city said.
The plan revolves around reimagining city building, reimagining services, modernizing the workforce, focusing on being a more relationship-based city and increasing financial viability.
“We are driven by the long term vision and goals for the city which were developed well before the pandemic struck. Other cities may be exploring a ‘back to basics’ approach, but for us, focusing on Edmonton’s strategic plan remains critical,” interim city manager Adam Laughlin said.
“Setting priorities and being clear about the choices we make will be the important and difficult work of this council over the coming year.”
Watch below: (from July 2020) Mayor Don Iveson said the City of Edmonton’s ability to provide services has been severely disrupted by both the COVID-19 pandemic and economic recession, and is now operating under a ‘new and stark’ fiscal reality.
In May, the city unveiled plans to help local businesses as they struggle to survive amid the economic turmoil brought on by the novel coronavirus.
That economic recovery program is a five-pronged initiative that is underscored by the Edmonton Economic Recovery Grant.
–With files from 630 CHED’s Kirby Bourne
Watch below: (From May 2020) A new $5-million grant program, one of several measures to help restart the economy, has been approved by the City of Edmonton. Vinesh Pratap has the details.