HATTIESBURG, MS (WDAM) - While Hattiesburg's ability to borrow money is still in question, city officials are optimistic they will regain a rating that will help them with major infrastructure projects in the future.
Moody's gives cities bond credit ratings, which are basically like a personal credit score.
"It lets the potential investor know how reliable the city is as far as cash flow, cash management and prompt payment of obligations," said Interim Chief Financial Officer Connie Everett.
As of November 2016, it stopped rating Hattiesburg. Council members said they were made aware of that in June.
Hattiesburg is two years behind on financial audits, and without the 2015 or a more up-to-date audit completed, Moody's won't issue a rating.
"What they have to look at is what is on that audit to get a true picture of that financial standing," said Everett. "Without a report to look at, they can't evaluate and determine whether that rating needs to be increased or lowered, so they are just holding the rating."
G.W. Kelly, chair of Finance, Real Estate and Business Law at The University of Southern Mississippi, said many entities want to keep a continuous rating for bragging rights or to show they've improved their credit worthiness, but said some cities don't borrow money frequently enough to need one. Therefore, he said the loss of a rating isn't inherently good or bad.
Everett said the loss does not impact the city's operating budget, but could impact major infrastructure projects in the future.
"If we were to go out in the market right now, it would effect our interest rate," said Everett. "Without a way to assess us, there's a higher element of risk to a potential investor. They are not going to be willing to take a chance on the city without having a better security for them, which comes in the form of a higher interest rate that the city has to pay."
Everett said the firm in charge of producing the audits for the city has "taken a different approach" than it has in the past, which has resulted in a slower process. As soon as the audits are current, she believes the city with be able to get that rating reinstated.
"There's not anything financially that would be detrimental to the city that would cause a reduction in rating, but that's my opinion, that is not Moody's opinion," said Everett. "I'm hoping we will get that rating reinstated at the level it was."