Town’s New Bond Rating Reflects ‘growth’
DRACUT -- The Standard & Poor’s (S&P) Global Ratings assigned an AA with a stable outlook rating for the town, a step up from its previous AA- rating.
“The rating action reflects growth in the town’s wealth and income metrics, as well as improved financial management policies and practices,” reads a report from the rating agency provided to The Sun by Town Manager Jim Duggan. “Additionally, we expect that the positive operating results that the town has generated over multiple years will continue, particularly given the strengthened financial practices.”
Duggan said he is “thrilled” with the rating bump.
“The increase to our bond rating is a clear indication of all the hard work that we’ve been doing over the past four years with being fiscally responsible, making strategic investments and sustainable investments when appropriate,” Duggan said. “It means cost savings for the town as we move forward to doing financial business.”
For example, Duggan said, it will cost the town less to borrow money. He gave credit to Assistant Town Manager and Finance Director Ann Vandal for taking the lead on this project. It cost approximately $12,500 to retain the service, according to Duggan.
Analysts summarized their opinion of Dracut in bulletin points before going indepth with each. They wrote that the town has: a very strong economy; adequate management; strong budgetary performance; strong budgetary flexibility; and very strong liquidity, to name a few.
A credit weakness mentioned in the report is “Dracut’s large pension and OPEB obligation, without a plan in place that we think will sufficiently address it.” OPEB stands for other post-employment benefits that local governments provide to their retired employees.
“We just need to be a little more aggressive on paying down out OPEB liability as we move forward,” Duggan said. “That’s not an anomaly. Every community in the commonwealth has this issue.”
Last Thursday, after Lowell General Hospital and local officials celebrated the grand opening of Circle Health Dracut, Selectmen Chair Jesse Forcier said the town’s bond rating increase is “fantastic.” He also gave credit to Vandal and Duggan.
“It makes the way we do business cheaper,” Forcier said. “Economically, it’s costing you less to borrow money, it’s costing us less to do business which leaves us more money in the general fund to fund other things. Of course we’re always looking for public safety and trying to help the schools.”
Follow Amaris Castillo on Twitter @AmarisCastillo.