By Andrew Firestone

The City of Somerville’s Bond Rating was raised last week, coming into ‘AA-’ level upgraded from an ‘A+’, by Standard and Poor’s (S&P). This enhances the City’s power to borrow money for projects due to a perception of being able to keep its financial commitments while also lowering the City’s interest payments to bondholders. City accounting was praised for its ability to maintain a low debt level, but the City also suffered due to the poor rating of their pension liability.

“This is an affirmation of the hard work this administration and the Board of Aldermen have put into embracing municipal finance best practices and shifting to a service oriented budget which focuses on delivering value for the taxpayer,” said Mayor Joseph Curtatone in a statement. “In particular, our decision to build our reserves, and then use them prudently during this global financial crisis, has enabled us to keep quality services in place while other municipalities had to make deep, painful cuts to vital services.”

The financial crisis has continued to take a toll on such cities as Springfield and Taunton, but Somerville maintains itself, even amidst disasters such as losing a fleet of police vehicles during flash floods last summer, said city officials.

“When you look at how severe the financial distress has been in other cities and towns in recent years, Somerville really is beginning to stand out as an example of how to manage a budget in difficult economic times,” said City Finance Director Ed Bean. “Every budget has presented a new set of challenges, bur our cautious financial approach has allowed us to weather the storms.”

The S&P also noted that household buying income was 10 percent above the national average, while unemployment was only 5.9 percent at the October, 2010 mark, well below the national average.

The City was marked down for having a high unfunded pension liability of  only 66 percent funding in 2008, which means that they would be short at least $90.1 million if every employee retired today. They were also marked down for their possible $8.5 million debt in the 2012 budget, ($2.5 million in loss through state aid, and $6 million in structural debt) but saw possible mitigation through managerial practices.

As well, the City was assessed to have a total value of $8.3 billion, with possible tax base expansion stemming from the future Assembly Square development. The City estimates a possible revenue increase of $17 million per year from this development alone.

The score of ‘AA-’ is now higher than Chelsea, sitting at ‘A+,’ but lower than Cambridge, who hold ‘AAA’ rating.