A good Moody’s rating means lower interest rates when the county issues bonds to pay for new capital projects like roads and refinances old loans.
“It is an incredible story. I can’t say that I’ve followed these rating changes nationally, but I have to believe one year after being downgraded, to be put on a positive outlook, with a very strong potential within two years of a downgrade to be upgraded again is a pretty rare feat,” County Administrator Charlie Young said. “It is something we’re earning by the actions that we’re taking.”
And from the finance director.
“The positive outlook assigned by Moody’s reflects sound fiscal management and budget policies focused on improving the overall financial health of the county,” Finance Director Tawana Lynn Keels said. “This is a result of the hard work of county departments and commitment by county employees to operate within structurally balanced budgets. Clearly this is a positive indicator that the county is on track to restore the Aa1 bond rating.”
Officials were crestfallen last year after Moody’s lowered the county’s bond rating, citing pension obligations and “narrow” fund reserves among other concerns. Moody’s, a credit-rating agency, downgraded the county from Aa1, the second-highest rating on the agency’s 21-level scale, to Aa2.
Disappointment was expressed again in April when they thought the “positive outlook” might be assigned but wasn’t. David Jacobson, a spokesman for Moody’s said the positive outlook designation means the county’s Aa2 rating could be upgraded within the next year or two.
“The positive outlook reflects our opinion that continued improvement in the county’s financial position coupled with prospects for renewed tax base growth raise the possibility of strengthened credit quality in the near term,” the Moody’s analyst who assigned the outlook wrote in a report.
In April Young said they were told assigning a positive outlook was not appropriate at that time. He believes their story — including the fact that sales tax revenues are up 9.4 percent compared to last year at this time and 8.5 percent above budget projections — is just “so compelling” they changed their minds, after the county met with them recently about the re-issuance of short-term notes.
Commissioner Don Dixon said he thought it might take years for the rating service to see things the county’s way. For a couple years now he has been cautiously optimistic about the county’s fiscal recovery. He has recently turned more positive the county has survived the Great Recession and past budgetary mistakes.
“We have right sized county operations and are committed to live within our means,” Dixon said. “Continued economic growth in the county supports the positive outlook and future upgrade by Moody’s.”
Eliminating two-to-three times a year pay hikes that used to be the norm; cutting the 2009 debt of $91 million down to $45 million; an anticipated $18 million year-end general fund balance, the new budget stabilization fund — the commissioners just doubled it to $4 million this week — and refinancing existing debt to save millions in interest, are just some of the steps the county has taken to wrangle a once anemic financial standing into robust health.
“This is a prime example that hard work and financial prudence pays off. We are pleased that the rating agency has aligned their positive outlook with ours,” Commissioner T.C. Rogers said of the Moody’s decision.
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