March 31, 2010

Following Anne Arundel County, Montgomery County could lose AAA

Concerned about preserving Montgomery's AAA bond rating, County Executive Isiah Leggett is offering several changes to his proposed budget to bolster the county's reserves. Leggett is seeking to increase an energy fee as early as this month and to move money into the county's reserve fund sooner than expected. Leggett's recent revisions were based on a warning from Fitch Ratings that the county's diminished reserve fund could affect its bond rating in the future, he wrote in a memo to the County Council on Thursday. Fitch, one of three major bond rating companies, kept the county's general obligation bond rating at AAA — considered the gold standard — according to a report also released Thursday. Fitch recently lowered Anne Arundel County's bond rating over concerns that mirror Montgomery County's budget situation.

Montgomery County's AAA bond rating, which it has held since 1973, is the highest available rating and is an indicator of the security of the county's financial debt, such as bonds. The rating, which is assessed annually, also determines the interest rate at which the county can borrow funds.

SOURCE: Gazette

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