County retains AAA fiscal status

FREEHOLD - The nation's three major bond-rating agencies, Fitch, Moody's, and Standard & Poor's, recently announced that Monmouth County will retain its AAA status.

According to a press release from the county, only a very small percentage of counties throughout the United States have been granted AAA ratings, the highest rating, according to Craig R. Marshall, Monmouth County's finance director. In fact, Monmouth County is the only county in New Jersey and one of only 22 counties in the nation that can claim to have received the highest score from all three rating agencies.

The AAA ratings reflect Monmouth County's sound financial management, stable growth and low debt burden, according to reports released last week by two of the bond-rating agencies. All three agencies awarded the county a favorable stable outlook for the future.

"I am extremely pleased that Monmouth County was recognized once again for its continued demonstration of sound fiscal management," said Freeholder Robert D. Clifton, liaison to the Finance Department. "Because the county has been careful in its spending and continues to maintain low debt levels, we are able to enjoy greater flexibility in providing quality services to our residents."

"The fact that we are able to retain AAA status during this recent global financial crisis is nothing short of remarkable," Freeholder Director Barbara J. McMorrow said. "It shows how well the county is managing its resources and planning for the future. This is the 11th year the county has been awarded AAA status from all three agencies, and I commend Craig Marshall on a job well done."

According to Moody's Investors Service, the AAA rating is a reflection of the county's "strong financial operations with healthy reserve levels, a substantial tax base with slowed but still healthy growth, and favorable debt position. The stable outlook reflects our expectation that the county's substantial tax base will continue to grow, albeit at more moderate rates; wealth levels will remain above state and national norms; the reserve levels will remain healthy despite near-term projected declines; and the debt burden will remain nominal."

Moody's made specific reference to events that took place as a result of the broader economic recession, including the salary freezes, layoffs and the county's maintenance of a healthy fund balance. According to the county's credit profile prepared by Moody's, "county officials continue to identify additional areas to improve efficiencies in an effort to cut expenditures and maintain sufficient appropriation reserves available for cancellation in subsequent years."

"This AAA rating confirms that the steps taken earlier this year by the Board of Freeholders were necessary to protect the taxpayers as well as the county's financial well being," Freeholder Deputy Director John D'Amico said. "It also shows what our fine county workforce can accomplish when they work as a team. On behalf of the people of Monmouth County, I thank them for the sacrifices they have made during this economic crisis."

Fitch said its AAA rating reflects the county's "solid financial management resulting in continued strong operations and financial flexibility, stable growth in its wealthy tax base, and low direct debt levels with rapid amortization." Fitch said it also expects the county will maintain financial flexibility despite its high fixed costs and cited the county's positive employment growth and current unemployment levels that remain below both the state and national averages.

All three rating agencies affirmed the AAA rating on three upcoming Monmouth County Improvement Authority (MCIA) bond issues, which also received a stable outlook.

"More than anything else, retaining AAA status has a direct and positive impact on residents in all 53 municipalities," Freeholder Lillian G. Burry said. "Loans on funds borrowed through the MCIA carry a much lower interest rate due to the AAA rating. Many towns purchase such things as police cruisers and fire trucks through the MCIA, and the tax savings are felt immediately."

"Maintaining the county's AAA rating is so important because there is a direct benefit to the taxpayers," Freeholder Amy A. Mallet said. "As distasteful as wage freezes and layoffs are, the impact to the county budget would have been far more detrimental had we not taken the actions that we did. The AAA ratings confirm that the freeholders continue to be good stewards of taxpayer money."

According to the press release, Monmouth County did not increase taxes in 2008. In preparing the 2009 budget, the freeholders focused on limiting any increase in taxes to below the rate of inflation and closing a budget gap caused by the sudden economic downturn. They also requested all department heads to curtail spending in the last months of 2008 by holding back 5 percent of their unspent balances, and were requested to reduce their 2009 operating expenses by 15 percent.

In preparing for 2010, all county department heads have been requested to trim their budgets by 5 percent.

Standard & Poor's announced its AAA designation for Monmouth County, but the report was not immediately available.

"The savings achieved by our AAA rating cannot be overstated," Marshall said. "Based on our upcoming general obligation bond sale, which amounts to about $70 million, we estimate the savings between an AAA rating and an AA rating to be about $1 million over the life of the bond. Similarly, the difference between AAA and A is estimated to be about $4.4 million over the life of the bond."