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Washington County bond rating upgraded

June 04, 2008|By JOSHUA BOWMAN

Washington County has received a bond rating upgrade, County Budget and Finance Director Debra S. Murray said Tuesday.

The upgrade from a AA- rating to a AA rating was given by Standard and Poor's rating agency and will save the county hundreds of thousands of dollars in interest annually on general obligation bonds, Murray said.

Bond ratings are given by three agencies and function essentially as credit ratings for governments, which issue bonds to finance big-ticket capital projects like roads and schools.

A higher bond rating from one or all of the three agencies results in lower interest rates for governments that issue bonds.

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In a report issued by Standard and Poor's, the agency cited "continued improvement in (Washington County's) financial position," the county's "role as a regional employment center," a "large tax base that continues to exhibit healthy ongoing growth" and a "low debt burden" as reasons for the upgrade.

County Administrator Gregory B. Murray said he expects the other two agencies, Moody's and Fitch, also to raise their bond ratings for the county.

The county's Standard and Poor's bond rating was last upgraded in 2006, from A+ to AA-.

Debra Murray said she didn't expect this year's upgrade.

"I'm surprised, based on the economic climate. A lot of counties are having a hard time balancing their budgets this year," Debra Murray said.

When Debra Murray began working as the county's budget and finance director in late 2004, the county was on a "watch list" for a possible downgrade from its A+ rating, Debra Murray said.

Gregory Murray said the county's long-range financial planning and the fact that it hasn't used funding surpluses to pay for baseline budget expenses helped spur the rating upgrade.

On Tuesday, the county accepted a low bid for fiscal 2009 bonds from USB Securities at an interest rate of 4.02 percent.

The interest rate is almost .2 percent lower than what would have been paid with a AA- rating, according to a chart provided by Debra Murray.

Over the life of the bonds, the county will save $8,846,720 in interest, or $221,168 per year, by moving from a AA- to AA rating.

Susan Ostazeski, a consultant for Public Advisory Consultants, said long-term financial planning is an important factor for bond issuers bidding on interest rates.

"These bonds go decades out. In this environment, credit is more important than ever," Ostazeski said.

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