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.
This article appears in Aug 7-13, 2013.
I recall that when Standard & Poor’s downgraded its credit rating of the federal government in August, 2011, the Republicans lost no time in wringing their hands and holding Obama, the Democrats and their fiscal policies solely to blame for the situation.
Funny that when Monroe County, after years of Republican control, gets hit with their own downgrade the Republicans are suddenly “dismissive” of the situation.
MJN:
The federal government has a lot more control over its finances than a county government trying to function in New York State.
Bart – Seems like there’s always an excuse (and a double standard) when the Republicans screw up.
MJN:
What do you suggest as a solution? Your choices are raise to taxes and/or cut spending. In a state that has the highest taxes in the country, I would say raising taxes is out. Period. So spending must be cut, and because the state mandated spending is 81 % of the county budget the only solution is to get the state to back off.
Bart – The first step toward a resolution of a problem is an honest evaluation of that problem. Unfortunately you’re still applying a double standard by trying to claim that those poor hapless and helpless Republicans who have been ruining, I mean running, Monroe County for years bear none of the responsibility and can’t do a thing because it’s all Albany’s (meaning the Democrats’ fault).
Oh, by the way, in case you’re interested. The Republicans have controlled the governor’s mansion for half of the last 54 years, and the state senate for all but a year or so since 1939.
MJN:
An “honest evaluation of the problem” won’t happen with close-minded prejudice against Republicans. You are the one imposing party affiliation in the discussion, mentioning it in every post. If you don’t have any ideas about solving the problem just say so. (FYI I’m not a Republican)
Bart – Apparently by “close-minded prejudice ” you mean daring to point out that the GOP is equally responsible with the Democrats for the state’s financial problems.
MJN:
No, I mean that your mind is already made up that it’s a political issue and the Republicans are to blame, and so there can’t be an ‘honest evaluation of the problem’ as you propose.