Back in 2013, the Mobile’s debt was ballooning. The City was $4.3 million negative in cash reserves. And soon after it suffered a downgrade from Standard and Poor’s; from AA- to A+. Now the city is touting a $45 million dollar debt reduction. Paul Wesch says it started when Mayor Sandy Stimpson’s administration took over. But does $45 million make a big dent?
“Right now we have something around $275 million worth of long-term debt,” said Paul Wesch, City of Mobile Finance Dir.
Before the $45 million reductions the debt total was around $320 million. That means there’s been roughly a 14% decrease.
“If you don’t accrue additional debt if you don’t take out more loans than you’ll be paying off some of that principal every year.”
So if the city isn’t borrowing where is the money for new projects coming from? Wesch credits the administration for seeking out more federal and state grants. Take for example the cruise terminal which is getting over $3 million in upgrades, doesn’t any of that come from the city?
“It came from two forms of contribution, one was $2.4 million grant from state government, and then $1.7 from is from cash.
In addition, Wesch says fewer new positions have been created, as the workforce has been reduced through attrition. The savings have not only cut down on debt but helped create a $20 million rainy-day fund for emergencies.
“A chemical spill, or a massive hurricane in that event you do have to have resources.”
Wesch expects the positive trend to continue, but at this rate, the city says it could take until 2017 to get its old credit rating back.