Northern VA Mayors and Chairs Protest Moody’s Negative Outlook for Local Bond Ratings
Dec. 7, 2011
- Moody’s retains a negative outlook for the Aaa Northern Virginia localities
- Northern Virginia is the economic engine of the Washington area and Virginia
- Northern Virginia’s continued strong fiscal management and overall financial picture bring stability despite external factors such as changes in the economy
- Alexandria Mayor William D. Euille
- Arlington County Board Chairman Christopher Zimmerman
- City of Fairfax Mayor Robert F. Lederer
- Fairfax County Board of Supervisors Chairman Sharon Bulova
- Herndon Mayor Stephen J. DeBenedittis
- Loudoun County Board of Supervisors Chairman Scott K. York
- Prince William Board of County Supervisors Chairman Corey A. Stewart
Vienna Mayor M. Jane
Moody’s decision to retain a negative outlook for our local bond ratings in no way reflects the continuing strength and sound fiscal management of our local communities. These ratings will increase the cost of borrowing for us all, forcing governments across Northern Virginia to reevaluate and perhaps curtail capital spending. The ripple effect of this situation on our local budgets could threaten basic services, just as we are slowly emerging from the multi-year, cyclical economic downturn.
Although Moody’s is supposed to take a long view of local economics, basing this decision on unknown future impacts of federal actions is shortsighted; it’s too early to determine any impact of potential federal reductions. If history is any indication, federal spending, contractors and jobs will continue to come to this region as seen in the Base Realignment and Closure (BRAC)-related moves and large infrastructure investment of $180 million in transportation improvements near Fort Belvoir. This signals a significant continued presence of the federal government in Northern Virginia.
Federal procurement is not tied to one particular agency, contractor or military base. Top defense contractors are headquartered in Northern Virginia, and contractors here serve both defense and nondefense sectors.
Global recruitment of employers and investors continues; access to international airports is an immovable, fixed asset that will be enhanced by the addition of rail to Dulles Airport. The nation’s capital is also not moving; access to the federal center of influence will always be critical, perhaps more so if federal spending will contract in the future.
Linking local bond ratings to future federal government actions ignores history and proven track records of strong financial management in the face of tough economic conditions. Northern Virginia localities received excellent bond ratings long before the enhanced federal presence within this region. Our localities maintained fiscal stability and triple-A ratings through many economic cycles and changes.
Since no one can predict what the federal government will do or how its actions may impact Northern Virginia, focus should be placed on what is known – how this region has managed the unexpected while maintaining financial excellence.
Each locality’s credit strength is derived from multiple factors and the cornerstones of this strength are steadfast despite external factors such as changes in the economy. Nothing has changed in terms of our local financial and debt management practices and our continued strong management and low overall debt burdens.
We’ve continued our fiscal discipline through both boom and bust cycles. Robust planning and forecasting procedures and strong budget monitoring have enabled rapid, responsive mid-course corrections to both revenues and expenditures. Our strong, consistent financial performance continues to yield financial flexibility.
Northern Virginia is a major component of the region’s economic success story and is an anchor of the Commonwealth’s economy. Actions that impact our cost of doing business could harm the steady progress in the National Capital Region.
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