Fairfax County's Aaa Bond Rating Retained with Negative Outlook
Dec. 7, 2011
- Moody’s retains a negative outlook for Fairfax County, ignoring strong fiscal management and low overall debt burden.
- Fairfax County has a robust business community with a strong, diversified economy
- Bechtel Corporation’s recent decision to relocate its headquarters to Fairfax County confirms itsdiverse economy and considerable commercial activity
Today’s decision by Moody’s Investors Service to retain Fairfax County on negative outlook ignores the strength and diversity of the county’s economy, which has long been cited by the leading credit rating agencies as evidence of its top rating of triple-A (“Aaa”).
Several months ago, Moody’s Investors Service placed the Aaa bond rating of the U.S. government on review for possible downgrade. Subsequent to this action and as a result of Moody’s contention that the economies of both the commonwealth of Virginia and Fairfax County are closely linked with federal procurement and employment and therefore vulnerable to dramatic changes in these factors, Moody’s placed both the commonwealth and Fairfax County’s bond ratings on negative outlook.
Fairfax County’s continued strong fiscal management and low overall debt burden brings stability in uncertain national economic times. Through careful fiscal planning and the continuous application of the Ten Principles of Sound Financial Management adopted by the Board of Supervisors 36 years ago, the county has held a Aaa rating from Moody's Investors Service since 1975, an AAA rating from Standard & Poor's since 1978, and an AAA rating from Fitch Ratings since 1997. As a result of these superior ratings, the county has saved over $486.3 million since 1978 on bond and refunding sales.
The County has maintained its stability and its triple-A ratings through many economic cycles and changes (e.g., recession in the 1990s, post Sept. 11, 2011 downturn, current recession, numerous election cycles and senior management transitions).
The County’s fiscal approach during the current downturn reflects the ongoing commitment to making difficult decisions:
- Eliminating all or part of employee compensation increases (FY 2010, FY 2011, FY 2012 with only 2% added in September 2011)
- Eliminating positions – 308 in FY 2009 and 191 in FY 2010 - Fairfax County’s merit position count in FY 2012 is 12,070, an increase of only 946 positions, or 9% over FY 1992.
- The ratio of County positions per 1,000 residents has decreased from 13.57 to 11.09, an 18.3% decrease. At the same time, the county has opened a large number of new facilities, including police and fire stations, child care centers and human services facilities
The demographics of the County cannot be ignored, which ensure economic stability beyond the federal presence.
- Top nationally ranked wealth levels
- Top nationally ranked education levels and school system
- Low unemployment
- 75% of the County’s real estate tax base is residential, and home prices are increasing
- Sales tax revenue is increasing
- Eight Fortune 500 companies are headquartered in Fairfax County
- Fairfax County alone is home to more office space than Miami, San Diego, Denver, Charlotte and Kansas City
Fairfax County has a strong history of taking decisive actions to meet its financial obligations. It has weathered projected deficits, taken programmatic reductions and eliminated positions to ensure an annual balanced budget.
It is disappointing that Moody’s did not recognize these financial and economic strengths and chose to retain the County on negative outlook, which could impact the cost of doing business with implications across the region and the commonwealth
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