Mayor's Office Press Release
Mayor: Passage of Pension Reform Continues to Boost City Financial Rating
January 18, 2018 -- The S&P Global Ratings service today raised Houston’s financial outlook to “AA stable” from “AA negative” in recognition of a $1 billion bond that reforms the city’s pension systems.
The rating company cited the city’s “very strong management, with strong financial policies” and its “strong economy” as factors in the positive change.
Voters in the Nov. 7 election gave overwhelming support to the bond package that placed the final cornerstone in Mayor Sylvester Turner’s hard-won pension reform package that will save taxpayers hundreds of millions of dollars annually and stabilize the pension funds for police, firefighters and other municipal employees. Police and municipal employees conceded $1.8 billion in benefits long-term in return for restoring greater reliability to the funds.
The Moody’s rating service raised the city’s outlook to “stable” in November because of the same factors.
For buyers of Houston’s bonds, the ratings boosts potentially raise their confidence level in the city’s ability to pay bond interest to them and potentially allows the city to lower the interest rates it offers to those investors, saving even more money for taxpayers.
“The pension reform victory continues to bear fruit for city government and everyone it services,” Mayor Turner said. “The reform package even changed municipal government’s net worth to $1.9 billion on the plus side from $95 million in the negative.”
“Despite the city and greater region facing recent stressors such as a (weakened) energy sector and damage caused by Hurricane Harvey, the city’s local economy has remained strong,” S&P said today. “The broad-and-diverse economy remains stable and Houston continues to be a hub for employment, especially in the energy and health-care sectors, as well as a draw for higher education and finance.”