1 year into pandemic, bond rates hold steady
Indicates timely debt payments by Anne Arundel County
A year into the coronavirus pandemic, Anne Arundel County has retained its AAA rating from S&P and its AA1 rating from Moody’s, indicating timely debt payments that comply with the county’s financial policies.
The S&P rating is the highest of the investor service officers. It means the county’s capacity to meet its financial commitments on the obligation is extremely strong. The Moody’s rating is the second-highest rating the service offers. It means obligations are considered to be high quality and are subject to very low credit risk. Anne Arundel has maintained the S&P rating for 15 years and the Moody’s rating for 20 years.
Budget Officer Chris Trumbauer said the agencies highlighted the county’s prioritization of climate resiliency projects and transparency with COVID-19 response spending. To emerge from the pandemic with such a positive outlook, Trumbauer said, gives him hope that next year the county might be able to convince Moody’s to up its rating to AAA.
The ratings affirm the county’s ability to pay its debts and allow the county to sell its bonds at favorable rates, Trumbauer said. They are based on revenue reserves, the ability to generate new revenue with taxes and fund balance.
“These strong bond ratings confirm that our fiscal policy is sound and that Anne Arundel County is a good investment,” Anne Arundel County Executive Steuart Pittman said in a statement. “We know that the effects of the pandemic will continue for years to come, but we are proud that we are emerging from the last year on strong and stable fiscal footing.”
The bond ratings were announced days after two budget-related bills were introduced to the Anne Arundel County Council. Bill 22-21 would transfer about $1.2 million into the county’s Revenue Reserve Fund, or rainy day fund, to achieve the current limit of 5% of the projected General Fund revenues — a total of about $84.1 million.
Another bill, brought forth by Councilwoman Jessica Haire, would bump the ceiling from 5% to 6% — a modest increase with bipartisan support.
Though the bills won’t be heard until April 5, they are all but assured to pass and become law. The transfer bill came straight from the budget office, Trumbauer said. Haire has the endorsement of Pittman’s administration, and all six of her colleagues have signed on as co-sponsors. The 6% cap would max the fund around $105 million.
The bills will receive their first hearing about three weeks before Pittman presents his budget to the council.
It will be the county’s second pandemic-era budget, but Budget Officer Chris Trumbauer said the county is in a better position now than it was a year ago.
“We did the smart thing and budgeted very conservatively,” Trumbauer said. “We have emerged from the worst part of the pandemic, and the economic impact as a whole hasn’t been as bad as we feared.”
The pandemic devastated employment in Anne Arundel County, with the Maryland Department of Labor reporting that more than 10,000 residents filed for unemployment insurance per week in the beginning of the pandemic. Between July and December, the unemployment rate hovered between 4.9% and 6.9%.
Pittman has said they believe most of these were low or middle-income earners and has tried to target his pandemic relief plans to those populations.
Trumbauer acknowledged that for many county residents, especially those who were in low-wage jobs before the pandemic, the last year has been financially devastating. The assessment, he said, is simply of the shortterm outlook for county revenues.
Trumbauer said Haire’s idea to modestly push the limit on the county’s Revenue Reserve Fund is exactly the right thing to do. It’s good fiscal policy for the county, he said, but it’s only possible because the county was conservative in the face of uncertainty last year.
Haire and her two Republican colleagues proposed boosting the limit from 5% to 10% last year when the budget was introduced — a move they said would set the county up for success as it endeavored to respond to the COVID-19 pandemic.
Their legislative effort failed, lacking the support of Pittman’s administration and the Democratic majority.
Haire said it made sense to her to boost the county’s savings account in the face of uncertainty, but she was ultimately overruled. Trumbauer said that an increase of the fund’s capacity by that much would have looked like a “gimmick” to the bond rating houses without contributing much.
Instead of trying the 5% leap again, Haire’s decided on a new strategy: She will aim for modest increases to the cap every year or so to slowly build up the county’s savings.
ROBERT ARIAIL