Moody’s Investors Service announced today it has upgraded the City of Cornelia’s issuer rating and general obligation limited tax ratings to A3 from Baa2. That’s good news for a city that had to take out bond insurance to obtain a good interest rate when it built the new Municipal Complex.
Cornelia has approximately $11.3 million in rated GOLT bonds. Now, with the improved credit score, the city can secure better interest rates on any future bonds or loans it pursues.
City manager Donald “Dee” Anderson cites several factors that influenced the upgrade, including an expanded tax base due to increased development and a millage rate that’s “less than half of what we are allowed to charge.”
Previous ratings were adversely affected by the fact Cornelia derives roughly 75% of its revenue from a single source – Fieldale. In February 2019, Moody’s noted Cornelia’s “limited and very concentrated tax base, weak demographic trends, sound, albeit nominally narrow, financial position, and an elevated debt burden” as the basis for its Baa2 rating.
In assigning the new rating, Moody’s said, “The upgrade to A3 reflects the city’s improved financial position, prudent management, and moderately growing tax base.” The upgraded rating takes into account the city’s highly concentrated tax base and elevated poverty rates.
Stable outlook
Cornelia has received a clean audit each of the past 14 years. During most of those years, Anderson says, “our revenue has exceeded our expenditures so we have been able to build a strong fund balance.” Cutting spending without cutting services has also become a hallmark of Cornelia’s financial management. Next year’s budget is $936,230 less than this year’s.
Anderson attributes the city’s improved rating and strong financial situation to “excellent budgeting capabilities.”
“I just want to thank all of the Department Heads for treating this city’s money as if it were their own,” he says. “Governments are notorious for wasteful spending but not in Cornelia. We always look for the most cost effective way to do things and don’t operate under the mindset that ‘just because the money is there it has to be spent.'”
Lauding Cornelia’s elected officials, Anderson adds, “we know that if we truly need something they will allocate the necessary funding to make it happen.”
