Baltimore gained welcome financial news yesterday when Moody's Investors Service Inc. upgraded the city's fiscal forecast from negative to stable.
Moody's pointed to revitalization projects, an established health care sector anchored by Johns Hopkins Medicine and downtown tourism as improvements to the city's fiscal health.
Moody's also credited the city with operating with "effective fiscal control" and remaining conservative in its borrowing.
"The city has also demonstrated an ability to maintain structural budget balance despite sluggish revenue growth and population loss," Moody's stated. "We also believe that the city's economic development initiatives, coupled with its regional importance, will slow declining trends and result in modest tax base growth."
For two years, the city has been fending off a potential downgrading of its bond ratings, which are critical to attracting investors and borrowing money.
Any lowering of the ratings would add millions of dollars to interest costs on city loans and make bonds offered by the city less attractive. Baltimore has maintained an A1 rating with Moody's, A+ with Fitch IBCA and an A with Standard and Poor's. Moody's had added a negative forecast for Baltimore as the city faced a projected $153 million budget deficit over the next four years. Two weeks ago, Mayor Martin O'Malley unveiled his first preliminary budgets showing that Baltimore had closed the gap on a $31 million deficit predicted for next year. Budget officials said unexpected increases in property and transfer tax revenues from home sales helped make up the shortfall.
O'Malley noted the ratings news yesterday as a sign that the city has begun a long-awaited turnaround.
"They said it's clear you guys are moving in the right direction," O'Malley said.