The City of Tacoma has received positive upgrades to its municipal bond credit ratings from two major financial evaluation agencies — Moody’s and Fitch Ratings — moving its financial profile to just one step below the highest possible tier.
Moody’s upgraded the City’s General Obligation (GO) bonds from Aa2 to Aa1 (the equivalent of moving from an AA to an AA+ rating). Fitch Ratings upgraded Environmental Services (ES) Solid Waste bonds from AA to AA+ and maintained the current, highly rated AA+ status for ES Stormwater and Wastewater bonds. With these recent adjustments, the City now sits at an AA+ equivalent across these major bond categories, just one step below the maximum “triple-A” (AAA) rating. Standard & Poor’s (S&P), another major financial evaluation agency, also currently rates the City at AA+.
Like many other municipalities navigating broader economic uncertainty, the City faces an ongoing structural budget dynamic where the projected cost of providing essential services is growing faster than projected revenue growth. The upgraded credit ratings indicate that the financial evaluation agencies view the City’s fiscal management favorably despite these conditions. In their assessments, upgrades were tied directly to the City’s financial discipline, strong fiscal oversight, and proactive fiscal policies.
For local governments, credit ratings function much like a personal credit score, serving as an independent, standard measure of a municipality’s creditworthiness and financial stability.
Higher ratings indicate to lenders and investors that the City remains a highly dependable, low-risk borrower. According to the rating agencies, several key factors directly contributed to the City’s elevated financial profile:
- Strong overall financial performance and debt management
- Healthy balances in the City’s reserve funds
- Steady population growth and a diverse economic base of local employers
- The strength and tenure of the City’s management team
- The City Council’s demonstrated willingness to balance budgets, build reserves, maintain sound financial policies, and make gradual, affordable adjustments to rates and revenues to protect residents from sudden financial shocks.