by Jeremy Moule
Moody's Investors Service has lowered Monroe County's bond rating, which could translate to higher borrowing costs. The move follows an approximately two-year period where Moody's first increased the county's rating, then held it steady.
The financial services company issued the action yesterday and it also changed the county's ratings outlook — its prediction of future ratings actions — to negative. In its explanation, it says that another rating decrease could happen within the next two years unless the county changes some of its financial practices.
In the explanation, the company says the new rating "reflects a significant weakening in the county's financial position, with a structurally-imbalanced operating budget dependent on nonrecurring revenues and reliance on cash flow borrowing to maintain operations." Specifically, it says the county's current budget relies too much on tax-lien sales, which are a one-shot revenue source, and isn't conservative enough in its sales-tax revenue estimates. It also says the county has weak financial reserves.
Many of the conclusions echo a June report from the state comptroller's office, which said Monroe County had the highest fiscal stress score of any local government in the state. It also cited the county's recurring budget deficits.
This morning I reached out to the county for a response, which I'll add to the post. But county officials are generally dismissive of rating agencies' downgrades. They say that what Moody's and other agencies want is for the county to raise taxes, and they aren't willing to do that.
Still, County Executive Maggie Brooks will likely agree with one factor in Moody's downgrade decision. In its explanation, it says state mandates limit the county's flexibility to reduce spending. Brooks frequently says the same thing.