In an about face from a previous emphasis on the city of Chicago’s strong credit rating under Mayor Richard M. Daley, the city’s chief financial officer is downplaying a decision Thursday by Fitch Ratings agency to lower the city’s bond rating from AA+ to AA.
In a written statement, Gene Saffold said city officials expected the move and “don’t believe it will have a significant impact on our long-term borrowing costs.”
Saffold and other city officials have previously emphasized the importance of maintaining strong credit because it can lower the costs of issuing bonds to fund city expenses.
In his written statement, Saffold noted that Chicago isn’t alone in suffering through difficult economic times. He pointed out that Los Angeles also has a AA- bond rating and that New York City’s is AA. But the outlook for those cities is rated as “stable” while Chicago’s is “negative.”
Saffold also defended the city against Fitch’s criticism of the city’s practice of using reserve funds to cover operating expenses during the last several years. “Utilizing one-time resources like reserves (as Fitch mentions in their report) is not something Mayor Daley wanted to do, but he was forced to choose that option in order to combat the catastrophic effects of the national recession on our City budget and Chicago residents,” Saffold said.
“The City had already taken significant steps to reduce spending, and the remaining alternatives were far worse–substantially raising taxes, drastically cutting services, or both. Mayor Daley couldn’t responsibly take either of those steps when people are suffering.”