The reason for the upgrade - some old bonds were paid off.
Nope. From Moody's press release announcing the upgrade:
Rating Action: Moody's Upgrades Jersey City's GO to Aa3,
31 Oct 2016
New York, October 31, 2016 -- Summary Rating Rationale
Moody's Investors Service has upgraded to Aa3 from A1 the rating on Jersey City, NJ's outstanding General Obligation Unlimited Tax debt. Concurrently, Moody's has upgraded to A3 from Baa1 the enhanced rating on the city's MQBA enhanced debt. The underlying outlook remains stable while the enhanced rating carries the negative outlook attached to the MQBA program.The upgrade to Aa3 reflects the city's rapidly growing, large and diverse tax base, satisfactory and improving finances, and manageable debt burden.
Debt went down very slightly in 2016 and, as you point out, is back up. According to Moody's updated research earlier this year, even at the higher levels there is no concern about the city's ability to repay its debt.
In theory, if Fulop did not bond this year, our debt would have been reduced and taxes would have fallen.
Backwards. The debt has a very low interest rate and represents a small added burden on the city's finances. If new debt hadn't been incurred, the city would have had to pay for these expenses (setting aside the Bayfront borrowing, since that is a mortgage) out of general revenue. This would have meant higher taxes.
Obviously, people who actually look at these things for a living are not concerned about the city's debt level. They also understand that a $1 in the early '90's is not the same as a 2018 dollar.