Standard and Poor’s (S&P) Ratings Services assigned its “AAA” issuer credit rating to Maricopa County.
The significance of this stellar rating is that the County can enjoy a more favorable rate in future borrowings. In today’s market, an AAA bond would yield about a 1/10 percentage point lower than the AA. When you assume $100 million in bonds issued for 25 years, the savings to the County and taxpayers would be about $1.7 million.
The higher rating also reduces the cost of bond insurance as it guarantees the repayment of bonds and it gives more flexibility in structuring the transaction.
Maricopa County Supervisor Max Wilson, District 4, says, “This “AAA” rating indicates Maricopa County’s sound fiscal practices. I am committed to responsible management on behalf of taxpayers and we’ll continue operating this way.”
S & P cited a half-dozen criteria that earned the County their “AAA” rating:
An increasingly strong financial profile and a continued robust and diversified underlying economic base with low unemployment;
High and increasing unreserved fund balances due to conservative financial planning and continued strong revenue growth, with additional flexibility provided by the county’s low property tax rate;
A track record of consistent operating surpluses in the general fund, with five consecutive annual surpluses owing to conservative spending patterns;
A diverse economy that exhibits continued strong growth in employment, assessed valuation and especially commercial and industrial development;
Very low debt rations and manageable capitol needs; and
Complete insulation from the County’s health care system--due to its transfer in 2005 to a separate health district with its own property tax levy.
In its Financial Management Assessment, S & P considers the County’s management practices are considered “strong," a rating which indicates practices are well-embedded and likely sustainable. S & P says, “The County has formal written policies that cover investment and debt management policies as well as a policy that requires a budget stabilization reserve and cash flow reserve. Investment results are reviewed monthly. The County also engages in multi-year financial planning, with a five-year forecast, and its capital plan also covers a period of five years and identifies potential funding sources and uses of funds.”