General Obligation Bond Rating

General Obligation Bond Rating

What is the story behind the curve?

Positive Factors
Strong and steady fiscal management. Montgomery County Government consistently demonstrates effective financial management practices and policies. County leadership has demonstrated a willingness to raise property taxes when necessary.
Resident profile. The County has a highly educated workforce, a healthy percentage of high-income residents, and low unemployment.
 Community assets. The excellent school systems receive proper funding, the value of County real estate, and the mix of life science and other high-skill industries provide an enviable array of qualities valued by communities.
Negative Factors
 Fiscal challenges. There are new infrastructure requirements that require new debt to be taken out, and the alternative of spending money from pension or reserve funds negatively impacts the rating agencies’ view of our credit-worthiness. At the same time, there is a need to maintain current and future county payroll and facilities. These obligations affect our capacity to absorb the consequences of the next recession.
general obligation bonds the rating agencies assess the following factors: Economy,  Debt Structure, Financial Condition, Demographic Factors, Management practices of the governing body and administration
 Changing county demographics and needs. The high cost of living may be driving away young people needed to grow the tax base, creating an imbalance. Similarly, older residents may choose to move out of the County.
 Economic vitality. The County is highly dependent on the Federal Government as an employer, while not enough new businesses being created to diversify our economy and bring new jobs to grow the tax base.
 Negative perceptions. Some view the new County Council and County Executive as not being fiscally restrained. There is also a feeling in Annapolis that Montgomery County is so wealthy that it does not need resources; the County’s delegation needs to change that and bring funding back to the County.

What strategies do we recommend to turn the curve?

1) Slow the growth of personnel costs.
Hold down the growth of County compensation costs and overall headcount to ensure expenditures do not exceed revenues just to keep the same level of service.
2) Continue to examine the structure and efficiency of government.
Elected leaders need to ensure taxpayer dollars are being used to meet the community’s needs and do so in an efficient and equitable manner.
3) Ensure capacity to raise future revenues.
Ensure that the County Executive and County Council is not prevented from raising taxes above charter limit when necessary.