Scranton officials highlight new financial rating
The outlook of Scranton’s financial future is positive, said officials from the city of Scranton.
“Today marks another significant milestone in the city of Scranton financial recovery," said Scranton Mayor Paige Gebhardt Cognetti.
Cognetti was joined at City Hall on Thursday to announce that the financial and analytics agency S&P Global raised the city’s credit rating to investment grade that for the first time in 12 years. The rating is now BBB-, up from BB+.
In 1992, Scranton was designated financially distressed under Pennsylvania Act 47. From October 2011 to June 2016 the city had no credit rating at all. The city shed financial distress status in January 2022.
The new rating will help the city save if they need to borrow money, said Cognetti.
“That's a signal to investors that, that our assets, our bonds are far less risky," she said.
That new rating also shows new businesses and entrepreneurs that the city is on steadier footing and worth investing in, she said.
Gerald Cross is a Senior Research Fellow at the Pennsylvania Economy League. The state appointed the league as Scranton’s financial recovery coordinator.
"In the past, it wasn't true that the city could be trusted to pay its own bills. It's been a long climb," said Cross, who has helped the city through the Act 47 process since 2005. "And I think when you have a third party saying to citizens 'you can trust your city with their tax dollars and provide services,' I think that's very important," he said.
Cognetti said reaching a milestone like the new credit rating has been a team effort over the past 20 years.
“We have a lot of work to continue to do together to make sure that we maintain and improve this rating over time," she said. "But it is it is a showing of stability.”
Highlights from the S&P summary:
- The upgrade reflects the city's improved cash position and ability to maintain balanced operations with federal stimulus.
- The 2023 budget is break even but does include a $2.3 million in American Rescue Plan Act (ARPA) funds. Officials however do not expect to use the ARPA funding for revenue replacement.
- Scranton's lower wealth and income ratios coupled with high fixed costs remain credit pressures.
- There is a one and three chance that S&P will raise the city's rating again over the next two years.
- The summary points out Scranton's above average concentration of employment in hospitals, nursing homes and social services and momentum of new city residents moving in and seeking affordability and job opportunities including entrepreneurship and business building.