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Fairfax County's Aaa Bond Rating Retained with Negative Outlook
Posted by: In the News... ()
Date: December 10, 2011 10:53AM

Fairfax County's Aaa Bond Rating Retained with Negative Outlook
http://www.fairfaxcounty.gov/news/2011/updates/county-aaa-rating-retained-with-negative-outlook.htm

Dec. 7, 2011

News Highlights

•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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Re: Fairfax County's Aaa Bond Rating Retained with Negative Outlook
Posted by: And More... ()
Date: December 10, 2011 10:54AM

Northern VA Mayors and Chairs Protest Moody’s Negative Outlook for Local Bond Ratings
http://www.fairfaxcounty.gov/news/2011/updates/northern-va-mayors-chairs-protest-bond-rating-outlook.htm
Dec. 7, 2011

News Highlights
•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
Statement from:

•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 Seeman


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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