Abstract:
Cash strapped municipalities have become the new normal in local city governments. This research was conducted to determine if council-manager systems of municipal government have better bond ratings compared to municipalities with other forms of local government. One theory is based upon evidence that city managers operate more professional cities. In addition, city managers may be trained to negotiate better financial contracts, make decisions utilizing analysis techniques, and practice extremely sound budgetary practices. This study examined if city managers give municipalities any advantages, when bond rating agencies award bond values for financial resources.
There was not a wealth of knowledge related to this topic. The data for this research was collected from secondary sources such as the US Census Bureau, Moody’s Investors Service, Augusta University city database, and various American city websites. Excel 2013 was utilized to randomly select 330 cities from the Augusta University city database of over 10,000 American cities. Moody’s Investment Services was the only chosen credit rating agency, because of the varied procedures that each agency utilizes to award city bond ratings. Moody’s website was the resource that was employed to assign municipal bond ratings to the 330 randomly selected cities. This was a quantitative methods study. A measurable value was assigned for council-manager forms of government, and all other forms of local government were assigned a different value.
As a result of this study, there seems to be agreement that the form of local government in municipalities does influence the city’s bond rating values awarded. This finding could aid municipalities in the future to determine what form of local government may work better for achieving better bond ratings.