By Brittany Tressler
Moody’s Investor Service has affirmed Montgomery County’s Aa1 rating on $384.2 million of long-term general obligation debt and revised the county’s outlook from from stable to negative.
“The negative outlook reflects the county's narrow financial position following several years of operating deficits, including a larger than projected deficit for fiscal 2012, weakened liquidity and, until recently, a pattern of not making its annual required pension contribution,” said a report from the company.According to Moody’s, which offers investors a simple system to deduce creditworthiness of securities, the need to replenish financial reserves also weighed in on the county’s rating.
“Assignment of a negative outlook reflects our view that county management will be challenged, in the near term, to replenish financial reserves in an environment characterized by slow economic and employment growth,” said Moody’s.
Moody’s said the bond rating remained the same due in part to recent measures by management.
“The Aa1 rating also reflects management's efforts over the past year to grow recurring revenues, control costs and improve long-term budgeting procedures,” said Moody’s.
While the outlook rating changed negatively, Montgomery County Chief Financial Officer Uri Monson said the county is “emerging from a deep financial hole,” according to a press release from Montgomery County.
“Moody’s reaffirmed our rating because they know that we are aggressively and systematically addressing the problems we inherited, but they also know that our road has not been an easy one to traverse, and these challenges will not be solved overnight,” Monson said.
In July of 2012, Moody’s revised the county’s rating from Aaa, the highest rating, to Aa1. The rating can affect the county's ability to borrow money.