Kent County captures a bakers dozen
While Standard and Poor’s lowered its assessment of U.S. Treasury securities last week from stable to negative, the ratings agency restated Kent County’s triple-A bond rating — a lofty evaluation the county has consecutively held each year since 1998. Moody’s Investors Service confirmed its top rating on the county’s long-term debt a few days after S&P’s action.
Commission Chairwoman Sandi Frost Parrish said she was pleased but not surprised that the county’s top rating was affirmed by both agencies. “We have positioned ourselves very well over the past several years to make sure that we are fiscally responsible,” she said in a statement.
“While we have had to make very difficult decisions, we believe those decisions will provide long-term benefits to the community,” she added.
The county was one of only 48 counties nationwide that received top ratings from both agencies, and just one of two in Michigan. Oakland County also scored triple-A designations from both. Moody’s only gave 87 U.S. counties its top mark, while S&P did the same for 67 counties.
Moody’s also rated the county’s short-term debt at M1G1, its highest rating, and S&P did the same with its top rating of SP-1+. The short-term ratings are crucial to the delinquent tax notes the county’s Treasurer’s office issues annually to make municipalities whole for their unpaid property taxes. A month ago, county commissioners authorized Kent County Treasurer Kenneth Parrish to borrow up to $42 million for the delinquent tax fund.
County Administrator and Controller Daryl Delabbio told the Business Journal the Moody’s rating arrived before the agency’s comments as to why it extended the county’s ratings. So he couldn’t comment on why Moody’s came to its decision. But he had a list of reasons S&P extended its highest rating to the county.
“The three biggest that I saw in the Standard & Poor’s response was the county’s fund balance being maintained at a $69 million level, or at a 40 percent minimum level. That, plus the last couple of years we’ve ended those years with surpluses in our operating budget,” he said.
“The third thing is, they said, ‘Standard & Poor’s considers Kent County’s financial management practices strong under its financial management assessment methodology,’” he added. “The higher the credit rating, the lower the interest when we issue bonds, and the lower interest results in less cost to taxpayers and ratepayers.”
The Government Finance Officers Association of the U.S. and Canada has agreed with S&P’s evaluation for years: It has given the county its Distinguished Budget Presentation Award annually for the better part of a decade. The award means the county’s budget meets the criteria as a policy document, as an operations guide, as a financial plan and as a communications device.
Two years ago, during the height of the recession, Moody’s added a negative assessment to the county’s top rating, just like S&P did to U.S. Treasury securities last week. But the next year, Moody’s returned the county’s rating to stable.
Parrish, Fiscal Services Director Steven Duarte, Kenneth Parrish and Delabbio traveled to New York earlier this month to make their case to the ratings agencies to extend the top ratings.