What Your City Owes - And Who's Really On The Hook
Vol. III, No. 295 - A five-city look at municipal debt, credit ratings and what these numbers mean for taxpayers and ratepayers.
Earlier this month, this publication took a deep dive into the financial reports of five local cities as an opportuntity to compare and contrast the financial conditions that exist for cities here in the northern Miami Valley. If you missed that story, you can read it here:
One part of the story that needs explored a bit further is the debt that each community carries.
Every city in our region carries debt. That’s not inherently a problem — borrowing to build infrastructure that serves residents for decades is a reasonable financial tool. But it’s important to realize that not all debt is the same, and your city hall doesn’t always go out of its way to explain the difference. So let’s do that here.
This publication pulled debt data from the most recent Comprehensive Annual Financial Reports (CAFRs) for five cities in and around Miami County: Troy, Piqua, Tipp City, Huber Heights, and Sidney. Before you look at a single number, you need to understand what kind of debt you’re actually looking at.
Two Types of Debt. Two Very Different Risks.
General obligation (GO) debt is the one that should get your attention. It’s backed by the “full faith and credit” of the city — which is a formal way of saying that your tax dollars are pledged to repay it, no matter what. Income taxes. Property taxes. If revenue falls short, the city has to find a way to make bondholders whole. This is the debt that deserves to belong in every candidate questionnaire and every budget discussion. Taxpayers are on the hook.
Revenue debt is different. It’s tied to enterprise operations — water systems, sewer systems, and in the case of Tipp City and Piqua, municipal electric systems. This debt is repaid through utility rates, not general taxes. Your monthly water bill services it. Your income tax withholding does not. When a city borrows to build a water treatment plant, it’s ratepayers — not all taxpayers — who carry that obligation.
Keeping these two categories separate is essential. Lumping them together produces a distorted picture — one that can either unnecessarily alarm residents or, just as dangerously, obscure real taxpayer exposure.
Here’s What the Data Shows
Troy and Tipp City have the lightest taxpayer-backed debt loads in the group — both under $260 per resident in general obligation debt. These cities have funded capital needs conservatively, leaning on reserves and revenues rather than borrowing. That’s a choice that reflects financial discipline, and it shows.
Piqua’s total debt of $87 million looks alarming at first glance. It shouldn’t. Within the past decade, the city completed a new water treatment plant and major sewer system upgrades — significant infrastructure investments financed through revenue bonds tied to those utility systems. That debt is repaid by water and sewer customers through their rates. Piqua’s actual GO debt — the portion taxpayers are responsible for — is $2.8 million. That’s the lowest in the cohort, and it isn’t close.
Huber Heights is the city that warrants the most scrutiny. At $1,489 in GO debt per capita, its taxpayer-backed burden is more than five times Troy’s. The city also collects the lowest income tax revenue per capita in the cohort — $586 per resident — which means it has less fiscal room to absorb that obligation if the economy softens or growth stalls. The debt isn’t unmanageable, but the margin for error is thinner than in peer cities.
What Independent Analysts Think
Credit rating agencies — Moody’s and S&P — review city finances and assign ratings that reflect the likelihood a government will repay its debt. Think of it as a municipal credit score, assigned by analysts who have no stake in making anyone look good.
One note before the comparisons: Moody’s and S&P use slightly different scales. Moody’s A1 is roughly equivalent to S&P’s AA-. With that in mind, here’s where our five cities stand:
Sidney leads the cohort with a full AA from S&P — one notch above the rest. Piqua’s AA- is significant given the scale of its utility borrowing; S&P looked past the total debt figure and focused on what taxpayers are actually backing. Huber Heights’ fresh AA- from March 2026 is reassuring — but it reflects the city’s size and revenue base, not an absence of financial pressure. A strong credit rating is a floor, not a ceiling.
Troy’s Moody’s rating from 2022 is the oldest in the group. Given the city’s track record, a reaffirmation would likely hold or improve — but as Troy looks ahead to future capital projects, an updated rating is worth pursuing.
These ratings are useful. They are not the whole story. They reflect conditions at a point in time. The decisions being made at city halls throughtout the region right now — what to borrow, what to build, and how to pay for it — will determine whether these ratings hold in the years ahead.
Overall, while credit rating look remarkably similar, the stories behind these ratings, and the debt that these communities hold are drastically different. Each community tells a story about the long-term liabilites and priorities that these cities have.
Announcing our March Community Survey!
Every other month, this publication takes time to ask our readers how they feel about the happenings in their hometown! What are the challenges? What are the opportunities? Is your hometown headed in the right direction? Our survey is the easiest way for you to express your thoughts. Next month, this publication will report out on the results.
Thanks for your time and your participation! It is greatly appreciated!
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