Winnipeg Free Press - PRINT EDITION

Moody's lowers city's financial outlook to negative

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MANITOBA'S poor financial outlook is hurting the City of Winnipeg.

Credit-rating agency Moody's Investors Service announced Wednesday it is changing the city's financial outlook to negative from stable based on the provincial government's performance.

In a statement, Moody's said while Winnipeg has shown disciplined fiscal planning, the city and province are linked financially and if the provincial government's prospects sour, so do Winnipeg's.

"In the event the Province of Manitoba were to be downgraded, this would result in a downward rating action on the City of Winnipeg's rating," the statement from Moody's said.

While downgrading Winnipeg's financial outlook, Moody's maintained the city's credit rating at Aa1.

It's uncertain what effect the downgraded outlook will have on Winnipeg's finances.

Coun. Russ Wyatt, chairman of the city's finance committee, said the negative outlook could result in a slight increase in borrowing costs -- the same result Finance Minister Jennifer Howard said the province could expect.

"It's very disappointing because our financial house has been in order," Wyatt (Transcona) said. "It's unfortunate the provincial government's financial house is not in order and now they are negatively impacting us.

"We're being directly impacted by their bad decisions."

Colin Craig, Prairie director of the Canadian Taxpayers Federation, said there are consequences to the provincial government's inability to restrain its spending.

"The provincial government's mismanagement of tax dollars has now impacted the City of Winnipeg and now Winnipeg taxpayers will have to pay twice," Craig said.

Wyatt said he's particularly concerned Winnipeg's financial situation could worsen if Judy Wasylycia-Leis is elected mayor.

"We already have one bad NDP government, we don't need two," Wyatt said, referring to Wasylycia-Leis' political ties and her former role as an NDP MLA and MP.

Wyatt said when the province refused to provide additional infrastructure funding to the city, the city had to increase its borrowing to pay for capital projects -- which Moody's cited in its report.

Moody's states Winnipeg's debt rating "is constrained by Winnipeg's debt burden that has increased over the last two years to around 58 per cent of operating revenues in 2013 as the city undergoes significant capital projects... Winnipeg's liquidity profile is solid but low compared to other highly rated Canadian municipalities."

Moody's said Winnipeg's financial outlook could be improved if the city were to improve its "fundamentals and financial profile" or if there were "a return to a stable outlook for the Province of Manitoba's rating."

Wyatt said the city's financial situation is solely dependent on the province.

"We need the provincial government to get its financial house in order and I don't see that happening any time soon based on what they've been doing."

 

aldo.santin@freepress.mb.ca

Republished from the Winnipeg Free Press print edition August 21, 2014 B1

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