An independent credit rating agency has given Hingham high marks in money management, saying the town is doing well and being managed wisely.
In a Standard & Poor’s Rating review, posted to the town’s website, analysts affirmed Hingham’s AAA credit rating, the highest rating possible, and said that rating was likely to remain for the next two years.
“The stable outlook reflects our opinion of Hingham’s very strong budgetary flexibility and liquidity, supported by good financial management policies, as well as a very strong underlying economy,” analysts wrote in the report.
For the average taxpayer, the report should come as good news, said Town Administrator Ted Alexiades.
“S&P thinks the town of Hingham is extremely well run and in a strong financial position, capable of meeting its ongoing obligations and providing a quality level of public services,” Alexiades said.
Additionally, taxpayers have paid less on projects the town borrows money for, thanks to Hingham's low interest rates tied to good credit. Last year, some debt issued with interest rates as low as .19 percent.
“These days, people are looking for safety and security, and they know if they buy debt from Hingham, they are getting an instrument of quality,” Alexiades said.
Part of the high rating stems from Hingham’s demographics – unemployment is low, and assessed value has remained steady at $5.5 billion.
The report also cites many management practices as the reason for the strong financial outlook. The town keeps at least 16 percent of its budget in reserves, and has a strong liquidity.
The percent of debt to the town’s budget is also manageable at 7 percent.
“We view the town’s management conditions as strong, with good policies that exist in most key areas although not all might be formalized or regularly monitored by governance officials,” analysts said.
Alexiades said the success stems from a fiscally conservative approach when working with the budget. More recently, officials have focused on unpaid liabilities, such as pension costs and Other Post Employment Benefits, often referred to as “OPEB”.
“It’s not just pushing things off to be dealt with by … another generation,” he said.
Though the report mentions those costs as being a potential pitfall, Alexiades said Hingham was way ahead of other towns in grappling with the liabilities. Future budgets also factor in appropriations for those needs, Alexiades said.
“We have a long way to go, but if you stack us up to our peers, we’re heads and shoulders above any community in the commonwealth by starting this [earlier] and moving forward with this,” Alexiades said.
To read the full report, click here.