Lawrenceville’s general obligation unlimited tax rating improves

Moody’s Investors Service has upgraded Lawrenceville’s General Obligation Unlimited Tax (GOULT) rating to Aa2 from Aa3. At the same time, Moody’s has assigned an Aa2 issuer rating to the city.

The GOULT rating applies to revenue bonds issued by the Lawrenceville Building Authority but backed by the city’s GOULT pledge. A GOULT bond allows the city to help repay debt with no limit on property tax increases. In theory, property taxes can be increased 100%, but only with taxpayer approval.

The city has about $91 million in outstanding debt as of June 30, 2021. Among the factors contributing to the improved rating are that the city does not plan to issue any new debt over the next five years and anticipates funding its $105 million capital improvement program with dedicated sales tax, electric, gas and other revenues.

The Aa2 issuer rating reflects the city’s ability to repay debt and debt-like obligations and is characterized by strong fund balance and liquidity ratios. In other words, Moody’s considers Lawrenceville capable of repaying its debt based on its current track record influenced by its healthy gas and electric utilities, which combined account for about two-thirds of the city’s total revenue.

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