Last week, the country’s three most influential credit rating agencies designated Cambridge as one of just 33 American municipalities worthy of AAA status. Moody’s Investor Services, Fitch Ratings and S&P Global ratings all noted that Cambridge’s nearly two-decade position amongst this select group is, in large part, due to the consistent and robust economic growth derived from the city’s commercial and institutional sectors. Below are some highlights from each agency’s report on Cambridge’s financial stability:
- The first of five listed credit strengths for the city is a “large and diverse tax base anchored by instructional presences and a robust commercial sector,” along with formal financial policies, strong fiscal management, ample flexibility and the expectation to fully fund all pension liability by 2026.
- “The (strong) outlook incorporates the stabilizing presence of the higher education institutions as well as the ongoing trend of consistent tax base growth from both appreciation and development.”
- “Total general fund revenue growth of about 4.7% annually over the past 10 years has exceeded both U.S. GDP and CPI for the same period, reflecting…strong growth in Cambridge’s economy and tax base.”
- Fitch notes that the city’s ability to withstand an economic downturn bolsters its rating, and that such “inherent budget flexibility” stems from “the city’s steady growth in revenues (that) has supported surplus operations over the past five fiscal years and a buildup of reserves to high levels.”
- “Overall, market value has grown by 10.1% over the past year to $43.6 billion in fiscal 2018. (Middlesex) county’s unemployment rate was 3% in 2016.”
- “Over the previous three years, the city has averaged 13.5% growth. The tax base is about 61% residential and 36% commercial and industrial. The 10 leading taxpayers account for 20% of the tax base, indicating moderate taxpayer concentration.”