For the second year in a row under Mayor Dave Bronson’s watch, the municipality’s bond rating has been downgraded, meaning holding debt will cost more taxpayer money.
This year, Fitch Ratings downgraded $105.5 million of the Municipalities general purpose and school bond debt from AA+ to AA.
The bond downgrade was covered in depth by the Anchorage Daily News. In a statement emailed to the ADN, Mayor Dave Bronson blamed Assembly spending for the downgrade, despite proposing a budget $17 million higher than the previous year, spending $3 million dollars on an East Anchorage shelter project without Assembly approval, and proposing that the municipality spend, rather than save, the second round of ARPA funds.
Bond ratings are determined on the state of the economy and a city’s debt. It’s also impacted by management. Under past administrations, it was common for the city to give lengthy, in-person presentations to credit rating agencies to influence their decision.
According to Assembly Member Forrest Dunbar, previous administrations have treated the municipality’s bond rating as a high priority, sending a team, including the mayor, to San Francisco to meet with the agencies.
Jason Bockenstedt, Chief of Staff to mayors Ethan Berkowitz and Austin Quinn Davidson, recalled bond meetings started with a presentation from the mayor advocating for the municipality and detailing all the positive things that were being done to strengthen the municipality’s financial position. Presentations from past administrations included a deep-dive of the city’s finances and a policy discussion of efforts to increase revenue and fiscal stability.
This year’s meetings were sparsely attended via Zoom, with only the Acting CFO, Grant Yutrzenka, and a few of his staff members showing up to represent the Administration. Bronson was not there.
Quinn Davidson and Bockenstedt attended on behalf of the Assembly. Past administrations had put forth a 30-slide presentation but Bronson’s was about 10, focused solely on the fund balance and FEMA reimbursements.
Alden Thern, who is in charge of FEMA reimbursements, was not in attendance to answer questions.
“There was no participation by the administration,” Bockenstedt told the ADN. “You have to actually show up if you’re doing the job.” Challenges faced by the municipality in past years, such as the 2018 earthquake and cuts in State funding for school bond debt, public safety and homelessness by Gov. Mike Dunleavy, did not lead to credit rating downgrades.
“In none of those years did we see our bond rating decrease, and I think part of that was we rolled up our sleeves and did the work to fix some of the problems,” Bockenstedt told the ADN. “Unfortunately I just don’t see that being done by this administration.”
Past administrations have addressed funding challenges by diversifying revenue streams through measures such as the Municipal Light & Power sale, passing the alcohol tax, and adding cannabis and fuel taxes. Past administrations also lowered costs through increased efficiencies by finding ways to share services with the State of Alaska, Anchorage School District and the Joint Base Elmendorf Richardson.
While the bond rating has been lowered, largely because of depleted reserves due to the COVID-19 pandemic, the municipality expects those reserves to be replenished as additional FEMA reimbursements are paid. Just this month, an additional $19 million of FEMA funding was obligated by the federal government.
The Bronson administration has often used FEMA as a political weapon, publicly casting doubt on whether these expenses would be reimbursed, despite no FEMA requests being denied. So far, FEMA has reimbursed or promised to reimburse $79 million in expenses.
At the bond rating meetings, the Bronson administration was unable to avoid a credit rating downgrade for the second year in a row, although Fitch Ratings did say the municipality has a “stable outlook.” According to some in attendance, the administration’s presentation focused largely on the negative aspects of the municipality’s financial picture and didn’t clearly bring into focus the positive.
