If the sky is falling, why do we keep getting upgrades?

Here's some edifying reading, from an 11/12 Standard and Poor's bond rating note raising our rating up to A+ (we were at A- eight years ago), noting our many fiscal strengths and a caution on pensions.  This is worth considering, in an election season when you'd think we were about to declare bankruptcy and 'go over the cliff', from what some are saying.  Could not be more wrong and further from the truth. 

The liability noted - unfunded pensions - is an issue for most municipalities across the country, arising from a change some years ago in how generally accepted accounting practices required government entities to book pensions.  MA has basically put all municipalities, including Amesbury, on a multi-decade payment plan to get them fully funded.

[Highlights mine] 

+++++++++++++++++++ 

"BOSTON (Standard & Poor's) Nov. 30, 2012--Standard & Poor's Ratings Services 
has raised its long-term rating and underlying rating (SPUR) on Amesbury, 
Mass.' general obligation (GO) debt to 'A+' from 'A'. The outlook is stable. 
The upgrade reflects our view of the city's progress in improving reserves and 
the city's long-term projections of structural budget balance. At the same 
time, Standard & Poor's assigned its 'SP-1+' short-term rating to Amesbury's 
GO bond anticipation notes (BANs).

In our view, the city maintains a strong capacity to pay principal and 
interest when the BANs come due. Standard & Poor's has determined that the 
city maintains a low market risk profile. The long-term debt to retire the 
notes has been authorized and the city provides ongoing disclosure to market 
participants.

The long-term rating reflects our assessment of the city's:

Good access to job centers along Interstates 95 and 495 in northern 
Massachusetts;
Extremely strong tax base and strong median household income measures;
Good financial position; and
Low debt burden with modest future capital needs.

Somewhat offsetting these strengths are the city's significant unfunded 
pension and other postemployment benefit (OPEB) liabilities.

The BANs and bonds are general obligations of the city, for which its full 
faith and credit are pledged. The city will use BAN proceeds to retire BANs 
outstanding that were issued primarily for sewer upgrades and other capital 
projects. 

The stable outlook reflects Amesbury's sound economic measures and recent 
general fund improvements. We could raise the rating further if the city were 
to further strengthen its financial position while improving its funding of 
pension and OPEB liabilities. While we do not expect to lower the rating 
within the two-year outlook horizon, significant declines in the city's 
financial position, due to demands from long-term liabilities or other areas, 
could pressure the rating."

Source: www.standardandpoors.com