Derby Mayor Rich Dziekan, in a 2017 Valley Indy file photo.
DERBY — The Dziekan administration received independent confirmation late last month that city finances are heading in the right direction.
S&P Global Ratings, in a report dated Dec. 28, upgraded Derby’s bond rating from A+ to AA-. The upgrade gets Derby back into the “high quality” range, according to S&P Global.
A press release from the mayor’s office pointed out the Dziekan administration inherited hidden budget problems after being elected in November 2017.
“It is extremely gratifying when an independent and objective outside organization affirms the steps we’ve taken to right Derby’s financial ship and expresses a positive outlook for Derby’s financial position moving forward,” Mayor Rich Dziekan said in a prepared statement.
A bond rating affects how much interest a city or town pays on debt, and it is an indicator of a local government’s financial health.
Derby had been downgraded in 2019 due to a host of financial issues.
The city budget in fiscal year 2017 had a negative $1.7 million fund balance, according to the S&P report. Then, in fiscal year 2018, the city accidentally double-counted state grants and overestimated “certain state formula-based grants,” according to the report.
The city’s budget blunders birthed a recovery plan that included selling assets, restructuring debt, temporarily cutting back on retirement contributions, and selling properties that were behind on tax payments.
“However, (Derby) also made some fundamental changes, including raising local property taxes by 6.4 percent in 2020 and 5 percent in 2021,” the report stated.
The city’s tax board also added a fund balance replenishment line to its annual budget.
As a result, the city had a $3.7 million positive balance in fiscal year 2020, the city’s statement points out.
The S&P report does not mention that the current city budget includes about $1 million in state aid that the city will not be receiving. New Derby Finance Director Agata Herasimowicz told members of the tax board last month that the missed grant will be something the city will have to keep an eye on as the city starts working on its 2022 – 2023 budget. Derby isn’t expected a giant hole in its budget this year, even with the over-estimate regarding state aid, as the city is still projected to finish the fiscal year with a healthy fund balance.
