County Executive Ike Leggett today announced that Montgomery County has retained its Triple-A bond rating from Moody’s, coming off a “watch list” from that agency in April that reflected concern over falling County revenues. Moody’s rating moved Montgomery County to a “stable outlook” category. He was joined by Council President Nancy Floreen and Management & Fiscal Policy Committee chair Duchy Trachtenberg.
The Triple-A bond rating allows Montgomery County to issue bonds for its capital borrowing at the most favorable rates, saving County taxpayers millions of dollars a year. The County had already received Triple-A Stable ratings from the other two bond rating agencies, Fitch and S&P, on $325 million of General Obligation bonds it is issuing tomorrow, July 8th.
“I’m very pleased that the prudent fiscal approach I recommended – and the County Council approved – has paid off,” said County Executive Leggett.
“We made the hard choices necessary to reduce our tax-supported County budget for the coming year by 7 percent from last year’s spending – while at the same time restoring reserves to the 6 percent policy level.
“The Council enacted my recommended changes to the Revenue Stabilization Fund law that will increase that reserve from 6 percent to 10 percent over the next nine years. We need to be sure that we as a County put aside more money to assist us in responding to volatile County revenue flows in lean years, especially from the income tax. The Council also approved my recommended changes to our fiscal policies that will strengthen our fiscal stability going forward. Under these changes, reserves cannot be spent to support recurring expenses. And, in good times, additional revenue would flow into the Revenue Stabilization Fund.
“The Council’s adoption of a six-year fiscal plan framework will help us to avoid any future structural deficits.
“These changes were critical to continuing the work I began four years ago to put the County’s fiscal house in order and reduce unsustainable spending. The economic downturn made that work even more critical.
“I want to thank Council President Nancy Floreen and Management & Fiscal Policy chair Duchy Trachtenberg for their leadership in winning Council approval for my recommendations – and all Councilmembers who supported the package.
“I’m delighted to be here today to celebrate a real team effort,” said Council President Nancy Floreen, “We responded quickly to changed forecasts, adjusted projections, and made structural changes to build a better fiscal future. At my urging, the Council adopted a requirement for a six-year fiscal plan that will contribute enormously.”
“Today's vote of confidence from Moody's and the other positive actions from Fitch and Standard and Poors underscore the importance of recent actions taken in Montgomery County,” said Councilmember Trachtenberg. “As governments at every level—national, state, county and municipality—struggle to rein in spending and find a way to maintain essential services, the urgency of sober and serious fiscal planning is inescapable. As stewards of the County's economy, the Executive and the County Council have shown real leadership and a vision for the future by building our reserves and clearing a path towards balanced budgets. When the current fiscal crisis is finally past, our fiscal plan and actions of the last month will be seen as part of the solution.”
“Our challenges remain,” said Leggett, “but today’s decision by Moody’s to take Montgomery County off the ‘watch list’ is good news all around – and shows that we are as a County on the right track.”
# # #