In large measure, Atlanta Mayor Keisha Lance Bottoms’ boast about the city’s solid financial situation holds up.
There are some caveats about the exact numbers that support it. Plus, measures of financial strength are always somewhat subjective.
A few key indicators give a broad picture of how well any municipality is doing.
One is the bond rating, which indicates the risk of lending money to the city. The bond rating firms bumped up Atlanta in 2016. Standard & Poor’s raised its rating to AA+ from AA. Moody’s raised its rating to AA1 from AA2. Fitch increased its rating to AA+.
As far as anyone can tell, those are the best ratings the city has ever enjoyed.
Fiscal analysts also look at pension fund exposure. As the number of retirees grows and health care costs rise, the future costs have become much larger than the cash in the pension fund needed to cover them.
One of the mavens of municipal finance data, Richard Ciccarone at Merritt Research Services, gave Atlanta a mediocre grade on its pension position. “Their funding ratio is only 65.9 percent, which is not that good,” Ciccarone said. “It’s been worse. It has been low as 55.4 percent in 2006.”
City spokeswoman Jenna Garland said the decision in 2017 to merge three pension boards into one would tighten fund management and increase investment returns. Not so fast, said Katherine Willoughby, professor of public administration at the University of Georgia.
“I would be in a wait-and-see mode,” Willoughby said. “These are volatile things, and you hope the money will come in, but you don’t know until it happens.”
The pension fund issue was not a significant factor in the late 1970s.
Perhaps the biggest feather in the city’s cap is the hefty balance of the general fund at the end of 2017.
The general fund, Atlanta’s main account to pay for everything from fixing potholes to keeping police on the beat, went from $153 million in 2016 to $200 million in 2017. Measured against the city’s $553 million budget, the percentage — 35.8 percent — had never been higher
The city’s main yardstick for comparisons across 40 years is the general fund’s ending balance as a share of the total budget at the start of the year. In those terms, 2017 was much stronger than 1978, 35 percent compared to 25 percent.
Michael Pagano, dean of the College of Urban Planning and Public Affairs at the University of Illinois at Chicago, said, “To have 35 percent for a city the size of Atlanta is remarkable.”
It’s also fair to compare the fund balance to actual spending. When we did that, the results flipped and the early years looked better than the recent ones.
At the same time, after correcting for inflation, the sheer size of the fund is larger today than in the past 40 years.
Willoughby and Pagano cautioned against reading too much into the one-time $71 million bolt of cash that came in 2017. Our research found that money came from the decision to liquidate two city funds, with tens of millions from the Underground Atlanta project accounting for the bulk of it.
“It was a benefit for this year,” Willoughby said. “But you can’t count on it happening again. To pin your good fiscal health on one big drop of money is probably not appropriate.”
All of the experts we reached told us that there’s always a subjective element in municipal finance. “This is more of an art than a science,” said Tracy Gordon, senior fellow at the Urban Institute. “How you combine the metrics and how you rate them involves some value judgments.”
Several support Bottoms’ comment on the city’s solid finances, though the weakest factor centers on pensions. There are factors that detract from the claim’s accuracy but the facts support the general thrust. We rate this claim Mostly True.
Support real journalism. Support local journalism. Subscribe to The Atlanta Journal-Constitution today. See offers.
Your subscription to the Atlanta Journal-Constitution funds in-depth reporting and investigations that keep you informed. Thank you for supporting real journalism.