RATING: Sales tax revenue has exceeded parish expectations

over a long period of time just like we would mortgage our own home,” said Elfert. “And when the interest rates decline, we take advantage of those declining interest rates to refinance just as we would do our own home.”

The bond is sold at a fixed interest rate with the governing body, which in this case is Terrebonne Parish, promising to pay off in a specific time period, Lajaunie said.

Interest rates fluctuate with the bond market, Elfert said.

According to The Wall Street Journal, bond interest rates dropped to their lowest rate in three years last month, reaching less than 1.7 percent at one point.

Credit-rating agencies rate the governing body’s ability to pay the bonds back, Lajaunie said. He used the analogy of a personal credit score.

“The bond rating is the equivalent of your personal credit score,” Lajaunie said. When your credit rating goes up, the interest rate that you pay to borrow money goes down. The same goes for bond ratings.

“It’s a testament to good financial management by the administration now and in the recent past,” the professor said. “And the benefit accrues to the parish as it goes to do future projects, its source of funding is going to be cheaper, and that’s a real benefit to the parish.”

According to Standard & Poor’s press release, the upgraded rating is thanks to a strong economy, good financial policies, and the fact that Terrebonne Parish maintains over 12 times the amount of cash needed to meet debt payments. That cash-on-hand could fund 83.3 percent of the total government expenditures.

Standard & Poor’s commended the parish for passing conservative budgets that project declining sales taxes and royalties from video poker and oil royalties, according to the press release. The agency said that sales tax revenue has exceeded what the parish expected in recent years. Standard & Poor’s also said that video poker and oil royalties have been stable over the recent years. The agency said they expect both of those trends to continue.