REGION OF WATERLOO — The Region of Waterloo remains in good financial shape with a triple-A credit rating despite soaring fuel prices this year, rising inflation and higher debt.
Moody’s Investors Service, an independent and credible credit rating agency, has assigned the region a triple-A rating. The region has maintained the rating for 22 consecutive years.
In a report presented to the regional council on Wednesday evening, Moody’s said “the region’s credit profile is being tested by inflationary pressures on costs and fuel expenses, as well as lower levels of liquidity. and a higher debt burden than (its) peers”.
Councilors approved the report without questions or comments.
Earlier this spring, councilors were told rising gas prices were putting significant pressure on the budget – an estimated additional $9 million by the end of this year. The fuel is used for transit buses, police cars, ambulances and garbage trucks.
Soaring inflation has also impacted service contracts with the region such as janitorial services and waste management. It has also pushed up the cost of bidding for capital construction projects.
But a triple-A rating reflects “prudent fiscal management and prudent long-term planning that underpin strong financial results,” the report said.
Moody’s said the region’s strong rating also stems from a “rich economic base and diverse sectors.”
Taxes, along with user fees and maintaining high levels of provincial and federal funds “protect the region from fiscal pressures related to transit losses and increased spending resulting from the coronavirus pandemic,” indicates the report. Property taxes and user fees represent approximately 75% of annual operating costs.
The report says it expects the region’s debt burden to ease over the next four years as the region implements pay-as-you-go financing for capital projects.
A municipality’s credit rating can affect the interest rate it pays for debt. A good credit rating helps a government obtain lower interest rates on debt, and the rating also affects local municipalities and school boards, for which the region obtains loans.