Three national municipal credit rating agencies affirmed their solid assessments of the county’s creditworthiness recently, but two of them repeated past concerns looking forward.
The actions precede the county’s sale of about $9.8 million in bonds to fund capital projects and the resale of about $11 million in short-term notes. The county typically reviews its credit ratings with these agencies prior to its annual borrowing.
County lawmakers authorized Comptroller Joseph J. Timpano in February to borrow for road and bridge repairs, computer system upgrade, airport improvements, heavy equipment purchases and other projects. The county will have about $120 million in outstanding bonds at the end of the year.
All three of the ratings and outlooks are unchanged from last year:
-- Standard & Poor’s: A+ with a stable outlook.
-- Fitch Ratings: A+ with a negative outlook.
-- Moody’s Investors Service: A1 with a negative outlook.
A negative outlook could result in a future rating downgrade with higher accompanying borrowing costs to the county. In general, the higher the credit rating, the lower the interest rate when a municipality borrows money.
The rating could go up if the county’s cash position and reserves improve and the operating budget is balanced structurally, said Moody’s in its analysis of the county’s financial situation. On the other hand, factors contributing to a downgrade could include further declines in the county’s cash position and reserves and an inability to structurally balance the budget.
While the numbers are not final yet, the county now projects it will close the books on 2011 with a surplus of more than $5 million. It started the year assuming $5.2 million would have to be used from reserves to balance revenues and expenditures.
In commenting on the anticipated surplus, Moody’s and Fitch both noted that the county reduced its workforce last year and sought to contain other costs.
"The county appears to have made substantial progress in 2010 and 2011 on right-sizing its spending base to be more in line with recurring revenues," said Fitch in its review.
"Putting our fiscal house in order has been one of my top priorities as county executive, and these ratings are a reflection of the hard work we have done to solidify our financial position and put county government on a stable fiscal footing," said County Executive Anthony J. Picente Jr. "Making the right decisions in terms of spending and taxes will mean that county taxpayers will save when we bond this spring for major infrastructure improvements that can help us develop a stronger economy and stronger communities."
Timpano said that the raters rightly viewed the future with caution, saying that county governments across New York are caught between the upward pressures of rising costs for state and federal mandates and the local property tax cap the state has implemented.
"We understand that the ratings agencies view the future with concern, as do we, because county governments face multiple fiscal challenges beyond their control," said the comptroller.
Picente said that the negative outlook highlights the funding imbalance counties face.
"The agencies note that we have taken action to reduce spending in the ways that we could so far," he said. "Their concerns mirror mine. That if we face a harsh climate through unexpected state or federal decisions, all of our hard work will be put into jeopardy."