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Moody's Upgrade Monroe's Bond Rating
Thursday, April 16, 2009 4:38:24 PM - Monroe Ohio

Comment from Monroe City Manager, Bill Brock: "We are very proud of the work that our staff has done to get us back to the A2 rating.  This rating is reflective of that work done during the fiscal emergency by all the departments of the City.  We will continue to keep that focus as we plan for the future.'

Moody's has upgraded the City of Monroe’s general obligation limited tax rating to A2 from A3, affecting $6.7 million in outstanding debt. The City’s A2 rating is based on its moderately-sized tax base located between the cities of Dayton and Cincinnati, solid operating reserves with stabilized financial operations, and moderate debt burden with average principal amortization.

Moody's expects the City's financial operations will remain strong over the near to medium term, as the City’s well-managed recovery from fiscal emergency has better positioned the City from financial challenges.  The City's prior financial difficulties led the State of Ohio to place the City in fiscal emergency in 2004. The designation requires strong financial oversight by the State Auditor's office and development of a financial recovery plan. The City was released from fiscal emergency in August of 2007, due in large part to improved financial oversight, elimination of deficit balances in funds other than the General Fund and a healthier cash and investment position. The City's improved revenue base stems in large part from the February 2006 approval of an increase in the City's income tax rate to 1.5% from 1%. First collections of the increased rate began in the second portion of 2006 has supported strong income tax growth, which City management has applied to fund balance to improve the City's reserve levels. The City ended fiscal 2007 with a $2.3 million operating surplus in the General Fund, ending with a balance of $4.3 million, or 53.4% of revenues.  Based on fiscal 2008 cash figures, the City ended with another operating surplus of $1.3 million, ending with a cash balance of $5.1 million, or 58% of receipts.

The City has also improved its budgeting practices, and now maintains a 3-year financial forecast for the General Fund, and monitors its budget on a monthly basis.  Based on the three-year forecast, the City expects to maintain balanced operations, although may consider drawing its balance to address cash-on-hand financing for City improvements going forward.  Within its cash management policy, the City has a General Fund balance policy of a minimum of 20% of revenues, and expects to maintain operating reserves well above policy levels over the near term.  Income tax revenues comprise the City’s largest revenue source, at 64% of revenues, while property taxes comprise 9.6% of revenues.

The City's current debt position is moderate (4.8% overall/1.5% direct), while principal amortization is average with 61.7% of obligations repaid within ten years. The City does not anticipate borrowing general obligation debt over the near term.
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