Fitch, S&P affirm Trumbull’s excellent credit rating, leading to lower interest rates for borrowing
TRUMBULL — Global credit rating agencies Fitch and Standard & Poor’s have affirmed Trumbull’s excellent credit rating, allowing the town to borrow money at a cheaper rate.
Trumbull’s rating is AA+, the second highest available, and signifies a high level of confidence that the town is financially sound and has adequate revenue and cash reserves, according to First Selectman Vicki Tesoro.
“This rating ensures we can continue to borrow, as needed, at favorable rates, and that financial institutions continue to have confidence in us,” Tesoro said. “Our underlying fundamentals are not just sound, they’re promising.”
In its ratings commentary, Fitch noted that its analysts expect that Trumbull “will maintain a high level of fundamental financial flexibility given its healthy reserve position and solid expenditure flexibility.”
The company also noted that the town has an affluent, although slow-growing, tax base and noted the town’s “moderately low” debt and pension obligations.
“Management maintains adequate control over wages and benefits through labor contracts,” the report said. “Fitch expects the burden to remain low based on the town's rapid debt amortization rate, manageable future debt plans and a commitment to fully funding pension actuarial determined contributions.”
Finally, the company stated that Trumbull was well-positioned to come through economic downturns relatively unscathed.
“Reserves have been steadily maintained at or near the town's formal fund balance policy of 10 percent of spending through conservative budget practices and moderate tax increases,” according to the report.
Standard and Poor’s agreed, writing “We believe that given the town’s well-seasoned management and track record of maintaining its sound financial position during several recessionary periods, the town will continue to maintain structural balance during these difficult times. This is particularly important, as we believe future operations will be under stress due to the economic recession.”
Like Fitch, S&P also cited as positives Trumbull’s regional economy, municipal management and healthy fund balance, in addition to its strong (98 percent) tax collection rate and five-year history of running budget surplusses.
Both companies also specifically mentioned the COVID-19 pandemic, and both expressed optimism that Trumbull would weather the storm.
“Although the full effects of COVID-19 have yet to be determined, we do not believe the town's economy will weaken,” S&P stated. “Furthermore, we believe continued economic development projects could offset any short-term declines to the grand list.”
Tesoro touted the rating affirmations as “a testament to ongoing financial management efforts” by the administration and management.
“Even in the middle of the worst economic and public health crises of our lifetimes, we’ve maintained our fiscal prudence and kept the town on an even keel,” she said.