Moody’s Investors Service upgraded the city of Burlington’s credit rating outlook this week from “Baa3 negative” to “Baa3 stable,” indicating increased confidence in the city’s financial management.
The move comes after the city closed a financing deal to cover the cost of settling a multi-million dollar lawsuit with Citibank over borrowed money that hadn’t been paid back.
Moody’s accompanied the upgrade with this explanation:
The stable outlook reflects the recent stabilization of General Fund operations and management’s commitment to addressing the negative unassigned fund balance in the General Fund and non-major governmental funds over the near term. The outlook also incorporates the terms of a pending settlement in the BT [Burlington Telecom] lawsuit that, if approved by the Vermont Public Service Board (PSB), will significantly limit the General Fund’s liability.
The settlement agreement, announced in February, calls for the city to pay just over $10 million to Citibank, and outlines a plan to sell most or all shares of Burlington Telecom in the next few years. The Vermont Public Service Board must approve the deal before it can proceed.
Burlington Telecom’s weak finances led the city’s credit rating to the brink of “junk bond” status when city officials moved money from the municipal general fund to cover the city-owned telecom company’s losses.
Mayor Miro Weinberger has made Burlington Telecom’s finances a priority, and has implemented new financial management practices, leading to a number of improved progress indicators in the past year.
