August 10, 2011
Picente, Timpano: Agencies Affirm County Rating, Sound Warnings of Hard Fiscal Times Ahead
Oneida County Executive Anthony J. Picente, Jr. and CountyComptroller Joseph Timpano today announced that despite serious fiscal pressures on all governments, Oneida County’s positive credit rating has been affirmed by three ratings agencies.
“Putting our fiscal house in order and keeping it that way without gimmicks has been one of my top priorities as County Executive, despite all of the contrary forces hitting us through the economy and other layers of government,” Picente said. “These ratings are a reflection of the hard work we have done to solidify our financial position and put County Government on a stable fiscal footing.”
“The rating agencies want to know that we are on top of the situation. These ratings reflect a very clear vote of confidence in the direction that County Government has been taking,” Timpano said.
Picente and Timpano noted that the raters rightly viewed tHe future with caution, noting that county governments across New York state are caught between the upward pressures of rising costs for state- and federally mandated programs and the local property tax cap New York State has implemented beginning next year.
“When we look at the fiscal world around us and the way that ratings agencies are taking a hard, strong look at government at all levels, Oneida County is very pleased to have its current credit status affirmed,” Timpano said. “We understand that the ratings agencies view the future with concern, as do we, because meeting the rising costs of mandated services while also staying beneath the tax cap sets up a budget dilemma that all of New York’s counties are going to experience this fall for the very first time.”
The ratings are:
Standard & Poor’s: A+ with a stable outlook.
Fitch Ratings: A+ with a negative outlook.
Moody’s: A1 with a negative outlook.
Picente noted some important trends for Oneida County and its long-term economic future in the ratings agencies’ report. “Although those of us living in the day-to-day world are always focused on getting more economic development, Standard & Poor’s noted that we have had economic growth and modest tax base growth. When they compared us with other counties, the comparison was favorable to Oneida County.”
Picente noted that Standard & Poor’s touted the county’s “sound financial position” while also highlighting the statewide plight of counties that use non-recurring revenue such as federal FMAP funds to balance budgets that are continually driven by the size and cost of programs counties are mandated to provide. Fitch summed up the threats by noting that Oneida County faces “high fixed costs, growing mandated social service expenditures, federal and state aid reductions and limited current and potential revenue flexibility …”
Fitch also noted that despite tax increases, Oneida County has also spent down fiscal reserves to limit the burden on taxes. Now having what Fitch called a “thin cushion,” Picente said the county cannot continue to operate government on budgets that are balanced by taking revenue from the fund balance. “For years, Oneida County has survived the rising costs of mandated services by taking what we had in the bank and using it to avoid sending taxes sky-high. Now, we can’t do that any more. Our coming 2012 budget will need to balance revenues with costs, even though what we estimate as our County Share of Medicaid costs will come close to consuming all of our property tax revenue. I would not characterize this outlook as negative, given the circumstances that county governments face. I would say that it is a very sobering realization that all of the pressures on all of New York’s counties to provide services without properly funding the costs of those services are coming to a head in the coming budget year. The ratings agencies are telling us we face a tremendous challenge, but also that Oneida County has shown the ability to manage its finances through some very difficult years.”
Picente said that the ratings agencies do not criticize county management, but rather, highlight the funding imbalance counties face. “The agencies note that we have taken action to reduce spending in the ways that we could so far,” Picente said. “Moody’s notes that we are seeing some increased sales tax revenue through the restructured system of food and beverage operations at the Oneida Indian Nation’s Turning Stone Casino. The question they are asking – and the one my budget team and I are wrestling with as we shape our 2012 budget, is how we can deal with even larger challenges in the coming year. I know it won’t be easy, but when you look at what we have achieved, there is no doubt in mind that we can manage through this crisis.”