County Comment/Moody’s Praises Washington County Financial Plan, Upgrades Outlook
by Norman Bassett,
Washington County Public Information Officer
Moody’s Investors Service cited Washington County’s continuous improvements in financial performance, economic development strides, creation of jobs and increase in the tax base as reasons for upgrading its outlook rating from “stable” to “positive” and affirming the County’s A1 bond rating earlier this month.
Moody’s Public Finance Group Analyst Lisa Cole said there are not many Counties in Maryland with the “positive outlook” designation attached to their bond ratings, due to the economy, and said the bond rating committee was very impressed with Washington County and the way it conducts its fiscal affairs.
On October 10th, Moody’s issued a financial report for the impending sale of 2003 Series A Public Improvement and Refunding Bonds, upgrading the outlook, assigning the rating and concurrently affirming the County’s previous A1 rating while giving a positive outlook to the County’s $151 million in outstanding parity debt.
On Tuesday, October 14th, the County sold or refinanced nineteen million dollars in bonds at the lowest interest rate in the history of County bond sales, 3.59%, from investment firm Morgan Stanley. County Director of Budget and Finance, Debra Bastian, said that the A1 rating and positive outlook from Moody’s had a great deal to do with the low interest rate received at the bond sale.
Moody’s said that the rating committee considered the county’s steady tax base growth and diversification, continued and consistent healthy financial performance and manageable debt position.
“Assignment of this positive outlook reflects our expectation that the county’s tax base will continue to grow and diversify, and that management will continue to maintain healthy financial operations, resulting in improved credit quality in the intermediate term,” Moody’s said.
“When I came here 10 years ago, the County was on a list of poor performers, due to financial problems,” Bastian said. “As we improved our financial position through proper planning and conservative fiscal policies, we went from a watch list to the stable outlook category, and finally reached this benchmark, the positive outlook.”
Moody’s cited the County’s tax base growth rate of 5% per year over the past five years, and an increase of 52% over the last 10 years, to its current $7.5 billion level.
The ratings committee liked the County’s continued economic development successes such as the FedEx Ground regional distribution center, International Telecommunications Satellite’s (INTELSAT) $50 million facility and the Airport runway extension project. Moody’s Lauded Washington County’s healthy financial performance, debt affordability plan, ample cash reserves at $17.4 million and consistent fiscal surpluses engendered by the Board of County Commissioners’ prudent, conservative management of assets.
The Moody’s spokesperson also said that if the trends continue, the County could possibly see a rating upgrade in two to three years. Positive grades by services such as Moody’s and Standard and Poor’s, which has given the county at an A+ bond rating, impact taxpayers by reducing the amounts borrowed each year, and by serving to attract new business and industry into the County.
The recent bond issue was originally set for $25.3 million, but was reduced in scope due to market factors. $5.4 million in “new money” bonds were sold, earmarked for school construction and renovation projects as well as capital improvement projects at Hagerstown Regional Airport. The 1993 and 1994 bonds were refinanced at the lower rate, as was a 1996 Maryland Industrial Land Act Loan.
The County stands to save about $1.3 million in interest expense over the life of the bonds, Bastian said.