As the city prepares to sell $43.5 million in general obligation bonds Monday, three New York bond-ratings agencies affirmed the city’s rating, meaning it likely will not cost Baltimore more to borrow.
One agency dropped a warning it had issued in March about Baltimore’s immediate financial health, although it did voice long-term worries about the city’s increased involvement with the public school system.
“We are confident that we will be able to maintain the rating as we work with the school system to improve its financial management,” said Rick Abbruzzese, a spokesman for Mayor Martin O’Malley.
The good bond news came as the O’Malley administration and the City Council continued to struggle last night to agree on a budget and tax package for the fiscal year that begins July 1. The council is scheduled to take final votes on the spending and tax plans Monday.
The council’s Budget and Appropriations Committee met for about two hours last night without voting. It will meet with the Taxation Committee at 10 a.m. Monday, five hours before the full council is expected to take final votes on O’Malley’s $45 million tax plan and proposed $2.1 billion budget.
At last night’s meeting, the administration detailed which city services would be added to the budget if the council approves $30 million in new taxes instead of the $45 million sought by O’Malley. The move was a concession to the council, coming days after the administration said it could not provide that information before the tax plans passed.
Without new taxes, O’Malley says he would reduce services such as fire protection, library hours and trash collection, and cut more than 500 city jobs, 186 of them police officers. Many of those jobs are vacant, but more than 200 city workers have received pink slips.
With $30 million in new revenue, O’Malley would restore 387 of the city jobs, including all but 44 of the police officers, city budget chief Edward J. Gallagher told the committee. Twice-weekly trash collection and recycling would continue. The Fire Department would receive another $3 million. The state’s attorney’s office would receive $1.5 million to give raises to prosecutors.
This week’s action by the bond-rating agencies comes after warnings of possible downgrades made in March, when city officials abruptly scrapped a proposed $42 million state loan for city schools and offered their own bailout. The city loan drained all but $14.2 million from Baltimore’s $56.2 million rainy-day fund.
In March, Fitch Ratings put the city on a “negative watch,” meaning the agency would probably lower the city’s A-plus rating soon. On Monday, Fitch took the city off that list but also changed Baltimore’s long-term outlook from stable to negative.
The change reflects a belief that the loan will be repaid, but that the city could suffer financially over the next one to two years by assuming more responsibility for schools, said Joseph Mason, a Fitch analyst.
Also this week, Standard & Poor’s affirmed its A-plus rating and said the city’s long-term outlook was stable. Moody’s Investors Service affirmed its A1 rating and did not assign an outlook.
