Montgomery County on Moody's bond rating watch list
Bond-rating agency Moody's has placed Montgomery County on a "watch list" because of a drop-off in revenues and the county's use of reserve funds, county officials said Monday.
Top ratings are key to borrowing more cheaply for county projects and are seen as an important endorsement of a jurisdiction's overall fiscal health.
"Placement on watch list for possible downgrade reflects deterioration of the county's financial position driven primarily by income tax revenue shortfalls, which is expected to result in the use of a significant portion of the county's General Fund and Revenue Stabilization Fund as of fiscal 2010," according to a Moody's report quoted in a memo Monday by County Executive Isiah Leggett.
Leggett also said a March income tax distribution from the state was $24.5 million below county estimates, which will require additional budget cuts and revenues this year.
Leggett earlier had called for upping the increase in the energy tax he proposed for next fiscal year, and imposing the tax in the current year to help county finances immediately. He is now developing a "revised savings target" to further bolster county reserves, Leggett said. Among the possibilities are cuts in capital projects and existing contracts and possible changes in major purchases, he said.
Another rating agency, Standard & Poor's, in recent days has reaffirmed the county's AAA rating, saying the county's "stable outlook reflects the inherent strength of the county's economy." But it said it could reconsider and "revise the outlook to negative" if the county fails to do more to stabilize its finances.
April 6, 2010; 2:23 PM ET
Categories: Michael Laris , Montgomery County
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