Moody’s Investor Service says Detroit’s economic and fiscal health on upswing
A key credit agency said on Monday that Detroit’s economic and fiscal health are stronger a year after bankruptcy but formidable challenges remain to keep the momentum going.
In July, Moody’s Investors Service upgraded Detroit’s to a positive rating, B2, from the stable B3. The rating measures Detroit’s overall creditworthiness for investors in municipal debt
“City leaders and management are taking aggressive steps to revitalize the economy and sustain the current positive trends,” Moody’s wrote in a statement Monday.
The city’s jobless rate has dropped to 11.5 percent in September compared to 16.3 percent in September 2014. Also, the city closed the fiscal year, which ended June 30, with an estimated operating revenue exceeding budgeted revenue by 1 percent , according to the Detroit Financial Review Commission. Revised estimates in September indicate that fiscal 2016 revenue is on track to exceed budgeted revenue by nearly 3 percent.
But Moody’s points out Detroit’s “formidable challenge” is maintaining economic growth while meeting high fixed costs. Further, the city’s general fund will resume responsibility for funding pension obligations beyond fiscal 2023.
Estimates at the time of Detroit’s exit from bankruptcy pegged the city’s fiscal 2024 cost at $111 million. However, more recent estimates indicate an annual cost as high as $195 million.