Move signals county’s fiscal strength; rating reaches highest level since 1976
The Erie County Division of Budget and Management announced Moody’s Investor’s Service, on Tuesday, upgraded Erie County’s credit rating to A1, up from A2, and noted a “stable” outlook for the county.
In its ratings rationale, Moody’s noted “the upgrade of the issuer rating to A1 is driven by improved liquidity and consistently adequate reserves,” and the rating also “factors a large tax base that serves as the economic engine of western New York; an above-average but manageable unfunded long-term liability profile; and significant state oversight provided by the New York State Fiscal Stability Authority.”
This is the highest the county’s rating has reached with Moody’s since 1976; the county’s rating with Moody’s sank to a low of Baa3 with a “negative” outlook in November 2006 after the “red/green” fiscal crisis.
“This rating by Moody’s – an independent, third party that rates municipal debt for the benefit of investors, not the local government – is proof that Erie County is on the right path and that our fiscal health is robust,” Erie County Executive Mark C. Poloncarz said. “Erie County was last rated this highly by Moody’s during the year of our country’s bicentennial celebration while Gerald Ford was president, the Buffalo Braves were playing at Memorial Auditorium, and the French Connection was lighting the lamp for the Sabres.
“Regaining an A1 rating shows that our long recovery from the ‘red/green’ fiscal crisis has been successful. In issuing this upgrade, Moody’s noted that improved liquidity and consistently adequate reserves were factors in their decision. Through prudent budgeting, my administration has been able to keep county cash reserves at appropriate levels, even when others have proposed spending those reserves. This rating shows what a short-sighted decision that would have been; our reserves would be lower and our credit rating would not be going up today. Thankfully we were able to avoid that mistake.”
Moody’s rated the county’s outlook “stable” to reflect its expectation reserves will remain adequate in the near-term, and the administration will continue to improve its liquidity position. Credit ratings help determine the interest rate and capacity at which Erie County can borrow money: The higher the credit rating, the lower the interest rate will be for future borrowings.