City Debt

Debt can serve several different purposes, it is useful in matching the costs to acquire or maintain an assets, to the benefits received from the assets; one year's debt payment equals one year's use.

It allows governments to build and acquire assets that the government would not otherwise be able to do.  It is also useful as an economic development tool.  In other words debt is not something that should necessarily be avoided or eliminated, but rather debt is something that should be used and managed effectively.  

Council and staff take managing debt very seriously as indicated with the new debt that was issued for the current street projects.  Council has directed staff not to include the yearly debt payment, that is not paid for by special assessments, in the Debt Levy (the debt levy is the part of the overall levy that is paid for by the property taxes) but instead to use Local Government Aid along with State Aid for those payments.

Big Lake Current Outstanding Debt

The City has been reducing the outstanding debt in the last few years.  From 2016 to 2018 the City has decreased it outstanding debt by 26.91%.  The current outstanding debt for the City is $41,284,253.22 (Principal and Interest).  After the 2019 Principal and Interest Payments the outstanding debt will be $33,856,379 .                      

All Cities Current Outstanding Debt

City's Bond Rating

In 2018, Standard & Poor (S&P) raised Big Lake's general obligation (GO) debt rating from AA- to AA.  Standard and Poor's Financial Management Assessment (FMA) views the city's financial practices and policies as very strong, having flexible liquidity, and supported by a very strong management and adequate economy.  A few highlights of the report are as follows:
  • Very strong management conditions
  • Very strong budgetary flexibility
  • Very strong liquidity
  • Strong budgetary performance
  • Strong institutional framework score
  • Adequate economy
  • City of Big Lake full bond rating report
The strong bond rating helps to ensure that future Big Lake Debt will be issued with the lowest possible interest expense (rate) and cost to the taxpayer.  The strong rating also provides opportunities to refinance outstanding debt at lower interest rates.