Oct. 18, 2010
Executive’s budget reform message cited by Wall Street in reaffirming King County’s top AAA credit rating
Strong financial management and prompt response to falling revenues recognized by all 3 major rating agencies
Reforms and efficiencies outlined last month by King County Executive Dow Constantine as part of his 2011 proposed budget have been cited by major rating agencies as reasons for reaffirming their top AAA credit ratings on a refunding sale of county Unlimited Tax General Obligation (UTGO) bonds.
The refinancing at lower interest rates of the UTGO bonds and a series of Limited Tax General Obligation bonds will save taxpayers nearly $5.5 million based on the results of today's bond-refunding sales.
"I'm pleased to see Wall Street cite our work to create a culture of continuous improvement in support of annual budgets that can be sustainable over the long term, and recognize that we are maintaining adequate reserves," said Executive Constantine.
"These ratings confirm that smart financial management is helping King County weather the financial storm," added the Executive. "Our credit outlook remains stable. A top credit rating means a low interest rate that will help us keep our costs down despite the lingering effects of recession."
The Fitch rating agency cited the county's sound financial management and noted that, "[The county] anticipates addressing [the] Fiscal 2012 structural gap by continuing its program of implementing 3% annual efficiency improvements." This is recognition of the reset of county finances proposed by Executive Constantine in his budget address on Sept. 27.
Standard & Poor's in its ratings report said, "Realistic revenue projections, a willingness to make politically difficult service reductions, and creative efforts to realign programmatic responsibilities with funding sources contribute to the county's capacity to meet its reserve targets and exceed forecasts."
Higher credit ratings allow the county to borrow money for projects at lower interest rates. The reaffirmed ratings mean that King County will be able to achieve an interest rate of at least 0.20 percent less than other comparable government borrowers with a credit rating that is one step lower, and achieve a rate that is 0.75 percent less for the same borrowers with a credit rating that is two steps lower than King County's.
Proceeds from today's two issues will be used to reduce the cost of debt service the county will pay on certain outstanding bonds that were originally issued to pay for a variety of projects, mostly roads and park improvements.