Montgomery County has maintained its excellent bond rating, but one agency still projects a negative outlook for the county because of its connection to Washington, D.C.
Rating agencies Moody’s, Fitch and Standards & Poor’s again have rated the county AAA, the highest rating, allowing it to borrow at competitive rates.
Although Montgomery’s rating might be AAA, the county’s outlook remains negative, according to Moody’s, one of the nation’s principal bond rating agencies.
County leaders have begun lobbying Moody’s to change its outlook for the county, arguing the delineation is much too broadly applied, Council President Roger Berliner said Monday.
Issuers with negative outlooks were viewed as having greater exposure to potential cuts in federal employment and federal spending, according to Moody’s.
Drastic federal budget cuts could hurt the county and, should the county’s bond rating downgrade, it would make the price to borrow higher, county finance director Joseph Beach said previously.
In 2011, 46,020 federal jobs were based in Montgomery, said Patrick Lacefield, spokesman for County Executive Isiah Leggett (D). Of the county’s 971,771 residents recorded in the 2010 U.S. Census, Lacefield said 72,492 work federal jobs, attributing the data to the Maryland National Capital Park and Planning Commission.
Moody’s kept Montgomery on a negative outlook despite county restructuring of employee health care, prefunding of some retiree benefits, replacing some borrowing with cash, and maintaining a manageable debt burden.
Major financial uncertainty still looms in Washington, now in the form of budget sequestration — a measure in last year’s federal debt-ceiling legislation that starting in January would impose mandatory spending cuts of $1.2 trillion during the span of nine years if a supercommittee of Congress fails to recommend equivalent deficit reductions.
Berliner (D-Dist. 1) of Bethesda said he is confident that Montgomery could handle the changes that would come with sequestration.
“Is it a pretty picture? No,” he said. “But is it something we can absorb? Absolutely. And we would.”
Berliner said he has spoken with county Chief Administrative Officer Timothy Firestine about creating a reserve fund to cover lost federal revenue in the event of sequestration.