City treasurer: debt ratios remain within targets but long‑range borrowing will raise per‑capita debt

Chris Cicero, the city treasurer, told the Finance Committee on June 17 that a revised baseline debt affordability study shows the city’s debt ratios are currently within the targets set by local code but that projected borrowings will increase debt per capita in fiscal 2025 and 2026.

The baseline report, dated June 11 and presented by Cicero with Roger Phillips, senior debt manager, describes the analysis required by city code and the metrics the city uses to manage borrowing. “This baseline version . . . reflects the city's expected debt position at the end of this fiscal year plus estimated additional debt issuances from previously authorized, debt funded projects,” Cicero said, and he warned that a later “budget update” version will add proposed borrowings from the mayor’s five‑year capital plan.

The study reflects favorable credit ratings and healthy reserve levels that keep most metrics in the report “in green,” Cicero said. He listed current agency actions and recent rating changes: S&P and Kroll recently affirmed the city’s AA ratings, while Fitch and Moody’s issued upgrades in 2024, and all city bonds carry a stable outlook. Cicero described the report’s key assumptions, including fixed and variable interest‑rate assumptions (about 5.25% fixed and roughly 4.75% variable) and modest growth assumptions for full‑value property and general fund revenues.

Cicero gave several headline figures from the handout. The presentation projected outstanding tax‑supported debt at roughly $2.4 billion by September 2025, including previously authorized capital projects; it also showed roughly $1.1 billion of expected principal paydown over the next six years. The report’s charts show overlapping school‑board debt layered on top of city debt and noted that debt per capita will exceed the council’s target in fiscal 2025–26 once overlapping debt is included.

Council members asked follow‑up questions about implications for the operating budget and for comparisons with peer jurisdictions. Council Member Layden said the debt affordability study and the five‑year revenue projections are among the most important documents for budget work and raised concern about withdrawals from the general fund balance earlier in the fiscal year. “As the general fund balance goes down, so does our annual revenue as well,” Layden said. Council Member Howland asked whether removing overlapping school debt would put city per‑capita debt under the target; Cicero referred members to page 7 of the report to see overlapping debt and said the school issuance in fiscal 2023 materially increased the overlap.

Cicero and Phillips emphasized that this baseline report does not include new borrowings that might appear in the mayor’s forthcoming CIP and that a supermajority vote is required to waive two or more debt parameters if the council authorizes additional borrowing that would breach policy thresholds. “Section 110.516 contains waiver language where a super majority of council members shall be required for a waiver of 2 or more debt parameters,” Cicero said.

The Treasurer’s Office said it will issue a budget‑update version later in July for the August budget hearings that will show the effect of the mayor’s proposed five‑year CIP. Cicero and Phillips took no votes; they closed by inviting committee questions and promising the updated report during the formal budget cycle.

The report and the council’s questions underline that the city’s current credit position is sound but that projected capital layering and previously authorized borrowings will raise the debt burden in coming years, a shift council members said they will weigh during upcoming budget deliberations.