With the completion of the 2024 comprehensive financial audit last month, Mayor Suzanne LaFrance announced today that her administration has fully restored the Municipality's bond rating reserve and emergency fund—replenishing critical savings that had been depleted since 2018.
Replenishing the “rainy day" fund stabilizes the Muni's financial outlook and helps protect taxpayer dollars. Financial rating agencies expect the Municipality to maintain 10% of its annual “major fund" operating expenses in a reserve fund—about $52 million—with an additional 2% set aside in a "rainy day" fund for immediate emergencies. Robust cash reserves signal strong financial health to credit rating agencies, which helps secure lower interest rates and saves taxpayers money on public borrowing costs.
The Municipality uses bonds as a tool to finance major infrastructure projects, such as road, drainage and building repairs and parks and trails improvements.
Anchorage's reserves had fallen below these target levels due to a combination of emergency-related impacts: capital costs from the 2018 earthquake and delayed federal disaster reimbursements, pandemic-related expenses and revenue declines. While federal reimbursements for the COVID-19 pandemic are now largely complete, the reimbursement process for the 2018 earthquake remains ongoing.
The previous dip in reserves contributed to minor credit downgrades in recent years, though municipal bond sales have remained strong. Having a complete financial picture is also important to rating agencies and potential investors. Finishing delayed annual audits and fully restoring these reserve accounts puts Anchorage back on firm financial footing.
"By closing the books and clearing the backlog, we were able to safely replenish our rainy-day reserves, putting us in a stronger financial position for the future," said Mayor Suzanne LaFrance. “When I took office, the Municipality was more than a year behind on its annual audits, and we lacked a clear picture of our finances. Today, we've delivered the fiscal stability, transparency and good government that Anchorage residents deserve."
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Contact: Emily Goodykoontz emily.goodykoontz@anchorageak.gov 1 (907) 205-6683