The City of Omaha continues to have strong bond ratings and is more than $7 million under budget after the third quarter of its 2019-20 fiscal year.

Ratings firms Moody’s and S&P Global both reaffirmed Omaha’s investment-grade ratings, citing a strong local economy, annexation, growth in the city’s tax base and strong budget management and financial policies, according to a recent news release from Mayor Jean Stothert.

The S&P rating is AA+, one step below its top AAA rating. And Moody’s rating is Aa2, two steps below its top Aaa rating. Both ratings earn the city good bond interest rates, which in turn saves taxpayers money.

Stothert said the city is working with its unions to find ways to meet unfunded pension liabilities, which could improve the ratings.

“The unfunded pension remains the barrier to a AAA bond rating,” Stothert said in a release.

The city announced its third quarter budget report shows total revenue $620,000 over budget and expenses $2.9 million under budget. The city also expects to see $3.7 million in savings from health care expenses, for a total budget surplus of $7.2 million.

The city charter requires that any surplus be carried over to the 2021 budget year. The city’s 2019 fiscal year ends Dec. 31, 2019.

“An end of year surplus is always important to give us a head start on the next budget year,” Stothert said, noting the city expects increased costs from solid waste and recycling collection.