News from City Hall
City Communications Office
City of Kansas City, Mo.
CONTACT: City Communications Office, 816-513-1349
FOR IMMEDIATE RELEASE: April 22, 2011
City’s General Obligation and Annual Appropriation Ratings Outlook revised from negative to stable
City officials credit the passage of the earnings tax
The City of Kansas City, Mo., received positive news with the April 19 release of a Fitch Ratings (Fitch) report that revised the Ratings Outlook on the General Obligation (G.O.) and Annual Appropriation ratings of the City of Kansas City, Mo., from negative to stable. The improved Outlook is based on the April 5 vote by City residents to retain the City’s earnings tax. The report from Fitch states that, “The Ratings Outlook revision reflects voter authorization for the continuation of the income tax for another five years.”
“We’ve worked hard to stabilize the City’s budget while continuing to provide good basic services to Kansas City residents,” said Mayor Mark Funkhouser. “The vote to retain the e-tax vote helps keep the cost of local government financing down and allows the focus to be on moving the city forward.”
Maintaining bond ratings at as high level as possible is important to the City and its citizens, as bond ratings determine the interest rates and costs for financing of infrastructure and other public works by the City. Raising the Outlook from negative to stable helps assure that the City will not incur increased interest costs.
“We are thankful that the voters approved the continuation of the earnings tax, which enabled the improved Outlook and prevented a subsequent downgrade of the City’s bond ratings,” said Director of Finance Randall Landes. “This strengthens our position as we move into better economic times.”
On Feb. 25, 2011, Fitch issued a report that downgraded the City’s G.O. rating from “AA+” to “AA”, downgraded the Annual Appropriation rating from “AA-” to “A+” and assigned the above mentioned negative Outlook. The report stated that the ratings downgrade “reflects the greater inherent risks to Kansas City’s financial performance… by the new initiative requiring voter approval of the continuation of the city’s principal revenue source every five years.” The report also stated that the negative Rating Watch or Outlook “reflects the risks associated with the first such voter referendum, which could have a materially adverse effect on the City’s already thinly balanced finances…”
Media inquiries and other requests for more information about this issue should be directed to City Treasurer Tammy Queen, 816-513-1024.