By Chris Jones/The Oshawa Express
An auditor has once again affirmed Durham Region’s AAA credit rating, praising the municipality’s financial management.
The region has prided itself on its AAA credit rating for some time now, with regional chair John Henry often citing it as part of the reason Durham Region should remain a municipality under the current regional review being undertaken by the provincial government.
In her report to regional council, commissioner of finance Nancy Taylor wrote “According to S&P Global [the region’s auditor], Durham’s Triple ‘A’ credit profile continues to reflect its very strong financial management, very strong budgetary performance and very low and manageable debt burden.”
According to Taylor, Durham is one of seven municipalities in Canada currently maintaining a AAA credit rating.
She also noted some highlights from S&P’s report regarding Durham’s credit rating.
These include the fact S&P continues to rate Durham at the higher end of Canadian municipalities, and “The Triple ‘A’ rating for Durham by is supported by “the region’s adherence to prudent financial policies which have culminated a track record of positive operating results,” according to Taylor.
The auditor also advises the region’s relatively low debt burden is manageable, and is also a major credit strength.
However, there were some words of caution in the auditor’s report, noting potential negative impact to the local economy could result in a negative rating.
One such possible impact to the region’s economy could be if revenue growth began to consistently lag when compared to that of expenditures, resulting in sustained after-capital deficits according to the report.
During the region’s latest finance and administration committee meeting, Whitby councillor Chris Leahy questioned the benefits of the credit rating.
The Whitby councillor noted municipalities such as Ottawa don’t have a great credit rating, but “when they put their money to market they would get pretty much the same ratings that we get, negating part of the benefit of having a AAA credit rating.”
He wanted to know if this was just a “feel good moment” for the region.
In response, Taylor noted having a AAA credit rating has plenty of “intangible benefits.”
“There is the benefit – theoretically – that our interest rates are more beneficial, so I’ll suggest to you in tight markets where there is a risk of financial concerns, those that don’t have the AAA credit rating would not get the same favourable rate,” explained Taylor.
The commissioner said a lot of the work which goes in to obtaining a AAA credit rating is part of what the region needs to do in order to be “effective and accountable decision makers in bringing recommendations to [council].”
She also noted having a AAA credit rating helps the region in finding business partners.
Leahy still wasn’t totally convinced however, as he said, “It’s almost that the benefit of having the AAA rating and having no debt means that we’re not borrowing as much as we could be to reduce the burden on the tax payer.”
He said being able to take some of the burden off residents is tangible to him, and he wondered why the region hasn’t taken the opportunity to do so by borrowing money.
Taylor said such concerns would be addressed in an upcoming long-term financing strategy.