Gurnee deemed more creditworthy

Despite sagging sales tax revenue, Gurnee has achieved a higher ranking of its creditworthiness that would make it cheaper for the village to borrow money.

Moody's Investor Services recently assigned an Aa1 ranking to the village government, above the previous Aa2. The upward move for Gurnee means it is just below Moody's highest, “gilt-edged” Aaa rating.

Mayor Kristina Kovarik said while there aren't any immediate borrowing plans, it's gratifying that an outside agency has deemed the village's finances worthy of an upgrade.

“We are very pleased that our bond rating was upped,” Kovarik said Wednesday, “and it is a testament to how (Village Administrator) Jim Hayner, our finance director and village staff have been working daily to manage expenses and cut costs where we can.”

Kevin McCanna, president and owner of Chicago-based Speer Financial Inc., informed Gurnee officials the amount of savings with the higher Moody's rating are dependent upon the size and term of future loans.

By contrast, Moody's cut the state of Illinois' rating to A1 in September. The cost of borrowing increases from a lower ranking because investors demand higher returns to compensate for heightened risk.

Moody's has stated in reports that Gurnee has a sizable tax base favorably located in Lake County, with a vibrant commercial sector. Gurnee also received kudos for a substantial recreational and entertainment presence.

Gurnee's sales tax revenue declined by $1 million in the 2010 fiscal year that ended April 30, compared to 2009. There also was a $166,000 revenue drop in the food and beverage tax, along with a hotel/motel tax decline of $451,000.

Kovarik took note of how village's creditworthiness has risen in a time of declining income.

“It's a challenge every day, but we've got good staff to manage it,” she said.

Vernon Hills earlier this year was awarded Moody's top Aaa bond rating. Only 19 municipalities in Illinois received Moody's highest rating for creditworthiness.