Key Rating Drivers Revenue Framework: ‘aa’: Fitch expects future revenue growth to approximate long-term U.S. inflation, supported by modest property appreciation and new construction that should add to the local tax base. Property taxes and state aid comprise the majority of the city’s revenues. There is no legal limit to the property tax rate or levy. Expenditure Framework: ‘aa’: Fitch expects the natural pace of spending growth to remain in line with to marginally above that of revenue. Fixed costs related to debt service, pension and other-post employment benefits (OPEB) are expected to climb but remain moderate over the next few years as pension costs increase and the city continues to issue additional debt to support school construction projects. Control over headcount, wages, benefits and work rules is somewhat limited by staffing and labor contract requirements. Long-Term Liability Burden: ‘aa’: New London’s debt and Fitch-adjusted net pension liabilities (NPL) represent a moderate share of personal income. Fitch expects that the city’s liability burden will increase though remain consistent with the ‘aa’ assessment given future debt plans associated with city and school construction projects and pension liability trends. Operating Performance: ‘aa’: Fitch believes the city’s substantial inherent budgetary flexibility and improved reserve levels support management’s ability to maintain high fundamental financial flexibility through future downturns.
Tue 21 Feb, 2023 – 10:52 AM ET