Good evening, Alaska!
In this edition: Circling back around to the city of Anchorage’s credit ratings and why it looks like Bronson is doing everything to undermine the city.
Critical credit ratings
Throughout the course of my time reporting on government in Alaska, one of the few things that everyone seemed to agree on was that credit downgrades were bad. With the falloff of oil revenues, the state’s credit rating began its stairstep down dragging local governments along with it, resulting in higher borrowing costs for everyone. That’s bad and because of the generally esoteric nature of credit ratings, it was never really something that anyone would try to score political points over. It was hard enough to explain to elected officials, why try to message off it?
Well, leave it to Anchorage Mayor Dave Bronson to try to weaponize a credit rating in his ongoing effort to demonize the Anchorage Assembly as a bunch of liberal over-spenders. He announced the city’s latest downgrade at the hands of S&P Global Ratings agency the same day the assembly passed a budget that ignored much of his proposed cuts, as if to suggest it was a direct result of the budget that had yet to be passed.
But take a look at the ratings report and much of the downgrade is chalked up to reserves that were depleted in responding to the pandemic and the 2018 earthquake, costs that the city expects to be nearly reimbursed by the feds once the projects have reached their end (and the city applies for those refunds). That would help restore the city’s revenue reserves, but at the end of the day the impact of the credit rating may not be even that significant. Per a report by Alaska Public Media:
Economists say the impact of the rating drop on taxpayers is likely to be small and that the city still remains in a strong financial position. Jonathan King, an independent economist in Anchorage who also serves on the city’s budget advisory committee, calculated that a taxpayer who owns a $400,000 home will have to pay about $.40 more for $50 million of new bonded debt.
“In the long-run the MOA will save money with a higher credit rating, but in the current low interest rate environment there is very little ‘on-the ground’ effect of being AAA vs AA+ or even AA,” wrote King in an email sent to an Assembly member.
To summarize: The credit downgrade wasn’t the result of the budget vote, is likely to improve once the FEMA reimbursement comes through and isn’t likely to have a significant impact on the city’s bottom line anyways. (By the way, the Fitch Ratings update was largely sunny about the city’s outlook.)
Still, very little of the whole ordeal has sat well with the Anchorage Assembly, which convened a work session on Friday to grill the administration over the downgrade. The concern being that whatever the administration presented to the S&P raters didn’t provide a clear picture of the city’s finances… and perhaps that it was intentional by the administration.
The administration conceded that they downplayed the city’s revenue outlook, arguing that the pandemic the administration has so far been keen on ignoring cast uncertainty over the city’s financial outlook. What that translated to was providing S&P with numbers that effectively forecasted the city wouldn’t collect any new revenue for the final quarter of 2021 and that revenue for next year’s would match the revenue collected through the first three quarters of this year. The administration’s sudden concern with the pandemic has conveniently cropped up as justification to cut the budget and was repeated when Bronson issued his vetoes.
It’s not sitting well with the Anchorage Assembly.
“My concern, I will just share, is that it doesn’t seem conservative, it just seems wrong,” said Assemblymember Kameron Perez-Verdia told the administration, according to the Alaska Public Media report. “I don’t know how it’s possible that we could actually take a loss next year based on what we know now.”
In the big picture, the fight over the city’s credit rating is just another step in what seems to be Bronson’s efforts to undermine the city. Well, maybe that’s being overly charitable. To put it more clearly, it seems like it’s yet another part of the long-running effort of conservatives to make government as bad and as inefficient as they claim it is on the campaign trail.
In the words of Grover Norquist, oft repeated by former Senate President Pete “Right-Sizing” Kelly, “I don't want to abolish government. I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub.”
This whole issue extends to the continuing exodus of long-time city employees, a trend that’s headlined by the sudden and unexplained departure of Anchorage Police Department Chief Ken McCoy as well as the efforts to clear house in the Anchorage Health Department. There are many more resignations, firings and retirements of good, dedicated public servants thanks to this administration.
At some point, this shouldn’t be about what side wins and what side loses. After all, we’re all ostensibly in this together. When one part of our community is thriving, we all thrive. Unfortunately, that doesn’t look to be the goal of Bronson, who has rather spend his time bad-mouthing the city to credit raters.
Perhaps one of the most important lines to keep in mind as we judge the remaining 31 months of the Bronson administration is what he said in an interview with Alaska Public Media shortly after the assembly rejected his initial pick of Sami Graham to oversee the library:
“If I wake up in the morning and the Left is—or the assembly at least—is not attacking me then I don't enjoy that.”
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