WAUSAU — Despite affirming the city of Wausau’s existing credit rating, Moody’s Investor Service last month issued the city a “negative outlook,” according to city documents.
The annual report, published June 15, shows Wausau continues to have an Aa2 credit rating, equivalent to a Standard & Poor AA rating. The rating matches many Wisconsin cities including Oak Creek, La Crosse and Green Bay. Unlike those cities, however, the investors service assigned Wausau a negative credit outlook based in part on the city’s mounting debt, according to the report. The purpose of Moody’s ratings is to provide investors with a simple system of gradation by which future relative creditworthiness of securities may be gauged.
A negative outlook means that the city’s credit rating could be lowered.
The report cited increases to the city’s debt, declines in tax base, deteriorating demographics, narrowed reserves or growth in the city’s outstanding general fund advances as factors that could lead to a credit rating downgrade.
Wausau City Council President Lisa Rasmussen cautioned against interpreting the negative outlook as the sole measure of the city’s success.
“The increased debt mentioned in the projection is also reflective of the intersection of many large development projects coming at the same time, the end result of which is projected to be over $150 million of new taxable property, development of the riverfront and public amenities and construction of some of the largest building projects in Wausau’s history,” Rasmussen told Wausau Pilot and Review. “This emergence of growth and new projects is a positive indicator of overall recovery in the economy as companies and developers are interested in new projects and expansion.”
The report points to Wausau’s large tax base and low unemployment figures as credit strengths.
But the negative outlook “reflects the city’s already elevated debt burden and additional debt issuances planned for 2017,” according to the report. The outlook also “incorporates the ongoing interfund advances to several tax increment districts, further pressuring available reserves.”
The city’s overall tax base in 2015 was $2,533,849, according to the report, slightly below 2014’s reported figure of $2,655,929. Rasmussen said the negative outlook could be due in part to an assessment error in 2016 that is in the process of being corrected. The error, along with the city’s “relatively stagnant” tax base, was noted in the Moody’s report.
Mayor Rob Mielke did not respond to emails and calls seeking comment for this story.
The report will be presented to the city’s finance committee on Tuesday during a meeting that is open to the public. Meeting time is 5:15 p.m. at City Hall.Moodys Report