One of the nation’s top three credit rating agencies has upgraded the city of Altoona’s credit from A to A-plus, a change that makes it cheaper to borrow — although, ironically, the policies that led to the boost tend to make borrowing less necessary.

S&P Global Ratings attributed the upgrade to the city’s recent healthy annual surpluses, robust reserves that exceed laudable policy goals and Altoona’s having lifted itself out of the financial mire that led to its entering the state’s Act 47 distressed municipalities program in 2012, according to a news release and a conversation with City Manager Christopher McGuire.

The new rating was applied to Altoona recently after the agency’s every-five-year review, putting the city four slots from the top of a 20-level scale that ranges from AAA to D (for default), according to McGuire and online sources.

The city has maintained surpluses averaging more than 7.5% of revenues over the last three years, with surpluses that have been at least “solid” in eight of the last 10 years; while also maintaining cash reserves that have grown steadily to reach $14.9 million for 2024 — far beyond the city’s stated goal of 10% of the previous year’s expenditures, according to the S&P citation.

The city is following “prudent management practices,” is budgeting conservatively, and is modernizing its financial operations through the recent adoption of OpenGov software, which allows for more public engagement with the budget and with city departments, according to S&P.

The modernization also includes bringing tax collection in-house and development of a long-term financial forecast, according to the news release.

The city is carrying a reasonable debt burden — one that is lower than it might have been due to its sensible use of a $39.6 million grant through the federal American Rescue Plan Act to pay for infrastructure projects, according to S&P.

The agency recognizes the city’s financial operations as “stable” for at least the next two years, according to the news release.

“This upgrade is a validation of our commitment to making continued progress from the decades of decline and neglect,” Councilman Jesse Ickes stated in the release. “(W)e have moved from a distressed status to a position of strength that mirrors the stability of our highest-rated peers” by “balancing growth, prudent risk management, maintaining manageable debt and a budget that prioritizes public services and responsibility.”

The city’s 26% property tax hike for 2025 was controversial, and people have asked what those taxes were for, McGuire said.

“This is what,” he said.

The city’s operational surplus for last year — the difference between income and expenses — was $1.8 million, according to McGuire.

The unassigned reserve by now is probably about $16.5 million, McGuire said.

The excess is allowing the city to operate on a policy of “pay as you go” for capital projects.

That helps keep down the cost of debt service, which is currently $3.4 million annually on prior bonds, officials said.

McGuire and Finance Director Jim Gehret are hoping that in five to seven years, when the outstanding bonds are “callable,” the city can afford to pay them off, using reserve funds.

That will mean freeing up the $3.4 million, McGuire said.

Mirror Staff Writer

William Kibler is at 814-949-7038.