Official says city's lower credit rating should be important to citizens

An "A" on a test is great. An "A" as the credit rating for the City of Memphis is not so good.

Four years ago, the city's credit rating was AA++. It then slipped to AA+, then AA, and now, simply A.

Memphis Chief Financial Officer Robert Lipscomb said Wednesday the rating is important.

"It says a lot about your city," he said. "It also says a lot about the cost of borrowing money."

Lipscomb is the man Mayor Herenton tapped to oversee the fiscal turnaround of the city.

"This happened over a period of time, so it's going to take us a while to get out of the situation," he said.

What happened "over a period of time" is the city's monetary reserve went from $60 million 4 years ago to just a half a million dollars currently. Last year the city used $25 million of the reserve just to balance the budget.

The lower credit rating means is less money for capital improvements, such as amenities in Memphis neighborhoods. City Council member Scott McCormick thinks it will have an impact on citizens.

"Part of capital expenditures are buying firetrucks," McCormick said. "You have to buy firetrucks to put out the fires, and you have to buy police cars that the officers can patrol and protect the citizens in."

McCormick also said he is more confident in the new financial team at city hall than he was two years ago.

"I hope that we've hit rock bottom," he said, "and we are heading back upwards."

City leaders are hopeful there will be a million dollars in the reserve at the end of the year. It could be years before a top credit rating is restored.