The novel coronavirus pandemic has produced extensive economic challenges for the City of London, but according to its latest credit rating from Moody’s Investors Service, the city rose to the challenge.
Moody’s has maintained London’s triple-A credit rating, the highest rating possible, for the 44th consecutive year.
“The City of London has a long, proud history of financial stability and prudent fiscal management,” said Mayor Ed Holder.
“The fact we were able to maintain this coveted rating during the midst of a pandemic and significant economic pressures is a testament to our council members, our senior leadership team, and our talented finance team.”
In late April, city staff estimated that the pandemic could deal a $33-million financial hit to the city by the end of August. That number is now down to $22 million thanks to measures taken — including staffing impacts and re-allocating 2019 surplus funds — and city staff have since suggested further measures to shrink the shortfall even further to around $7.4 million.
In mid-August, it was announced that the City of London will receive just over $40 million from upper levels of government as part of a multi-billion-dollar funding announcement made in late July.
In a Sept. 22 meeting of the Strategic Priorities and Policy Committee, city staff actually projected a year-end Property Tax Supported Budget surplus of $15.3 million, and recommended various ways to use those funds, including suggestions to reallocate portions to a contingency reserve or reinstate some previously deferred investments, for example.
“Although COVID-19 impacts total $68.4 million which is still in excess of the COVID-19 related grant funding,” the report said, “service level decisions and other operational cost savings factors are anticipated to mitigate the pressures experienced to the end of the year.”
Holder says the city prides itself on “responsible use and allocation of taxpayer dollars” and the credit rating validates that approach.
According to a release from the city, Moody’s pointed to the city’s fiscal plan and practices, including its multi-year budget format first introduced in London in 2016, “which contributes to stable operations.” The city says Moody’s also mentioned London’s “recent history of positive operating results, application of strict controls on issuing debt, and a conservative approach in the city’s debt and investment policies.”
“The City’s achievement of the Aaa credit rating for the 44th consecutive year is a reflection of the City’s sound financial policies and prudent financial planning,” said chief financial officer Anna Lisa Barbon.