Anchorage maintains high rating on short-term bonds

In its report, the analyst, Standard & Poor's, said the city is being well-managed now, and had a "good" fund balance in December 2008, at the end of the former Mayor Mark Begich's administration as well. The fund balance is money the city has in reserve to keep cash flowing from day to day.

The accuracy of financial information Begich's administration made in its last months has been the subject of controversy, with two reports from current city attorney Dennis Wheeler critical of the prior administration's handling of city finances.

The Anchorage Assembly is considering whether to order an independent audit of certain financial dealings from 2008. Begich resigned to become U.S. senator in January 2009.

One Anchorage Assembly member, Bill Starr, last month said he has asked the FBI to evaluate Wheeler's accusations, including claims that Begich's then-fiscal officer may have misrepresented details about the city's financial health to Standard and Poor's.

Julie Hasquet, spokesman for Begich, said in a written statement that the AA bond rating is "further proof of the professionalism and integrity of the information provided by the Begich administration. You can rest assured if Standard & Poor's was concerned about the bond rating, they would make it known in short order."

Mayor Dan Sullivan says the new financial rating reflects the fact that his administration made cuts required to close a budget gap. "We're pleased (the report) looks at the corrective actions we've taken," he said.

Sullivan also said the report puts to rest city fears that the bond rating would be hurt by the accusations in Starr's letter.

"We were concerned about any potential impact," Sullivan said at a press briefing last week. "We heard that our bond rating is in fact maintained."

Lucinda Mahoney, chief financial officer for the city, said she sent Starr's letter and copies of the Wheeler reports to Standard & Poor's to make sure it knew everything that's on the table.

In response, Standard & Poor's gave the city a rating of SP 1+ -- the highest rating, said Mahoney -- for short-term notes the city wants to sell to raise money until property tax revenue come in later this year.

Standard and Poor's also signaled the rating for longer-term bonds would be AA -- the same as it has been, said Mahoney. Standard and Poor's said that rating is based on "what we consider a stable underlying economy and good financial management."

Standard & Poor's said the city's fund balance at the end of Begich's term was "still good in our opinion at 4.1 percent" of the budget.

Sullivan said, however, that the city requires its fund balance to be about 8 percent of the budget, and the Begich administration should not have let it dip to 4 percent without Assembly approval.

Mahoney said statements about Anchorage's long-term debt rating are preliminary. The city won't get an actual rating for long-term bonds until March and April.