Elite Credit Ratings Reaffirm Tuscaloosa As One of Alabama’s Most Fiscally Strong Cities

Two of the world's largest credit agencies reaffirmed elite ratings for the city of Tuscaloosa last month, cementing its status as one of the most financially strong municipalities in the state.

In a Friday press release, a spokesperson said Fitch Ratings reaffirmed the city's AAA rating, and Moody's Investors Service also reaffirmed Tuscaloosa's Aa1 rating following reviews conducted in June.

Both ratings are signs of rare financial strength and stability, but especially the AAA from Fitch, which is the highest they award.

"Being Triple A rated by Fitch means we are among the elite in Alabama - only Huntsville and Hoover join us in that category among major cities in our state," Tuscaloosa Mayor Walt Maddox said in a video highlighting the ratings.

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Both agencies applauded the city's firm reserves, which they said are the result of pumping the brakes on spending during the pandemic and remaining fiscally conservative since.

"As economic conditions improved post-COVID, revenue, especially from sales taxes, significantly exceeded budget expectations, leading to substantial reserve increases," Moody's wrote in a report.

“Conservative budgeting practices and sound financial management have long been the capstone of the City. With these tenets firmly in place, we’ve grown our General Fund’s unrestricted reserves by 150%—from $13.8 million in 2019 to $34.7 million in 2024," said Carly Standridge, chief financial officer for the city. "By extending our forecasting horizon to 10 years, we’re able to anticipate both opportunities and challenges, allowing for proactive, data-driven decision-making. It’s an honor to have our financial strength and operational discipline recognized at an elite level by both Moody’s and Fitch."

Earlier this week, the Thread reported that the city is reviewing more than two dozen properties for potential sale as an avenue to raise money. The need is partially driven by the city's aim to have converted all police and firefighter pension plans to the coveted but expensive Retirement Systems of Alabama plans by this time next year.

The credit agencies above told the city they would need to cut $4 million a year out of the subsequent three budgets to deliver its RSA promises. Maddox and the city's chief operating officer, Brendan Moore, presented the property sales as a way to raise that money without cuts to the $200 million general fund budget.

In a statement about the credit ratings, Maddox said the city is well-positioned to execute the conversion while also lobbying for reform on how online sales taxes are collected and distributed in Alabama. 

"For years, our team and City Council have worked diligently to address the dual challenges of RSA conversion and SSUT. Last week, our approach and efforts were validated by the independent analyses of Fitch and Moody’s," Maddox said. "Achieving this elite standard isn’t accidental. It’s earned through evidence-based planning, strict adherence to conservative budgeting, and a proven track record of responsible stewardship of taxpayer dollars.”

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