- the native canadian

James Goodman
Staff writer

(July 7, 2005) — Citing Monroe County's continued difficulties in getting rid of its budget deficit, Fitch Ratings has moved the county from a "stable" to a "negative" outlook.

What's at stake

Monroe County faces an ongoing problem of spending that exceeds revenue. This puts pressure on the county to cut services or raise taxes. It also results in the county having low credit ratings, which makes borrowing more expensive.

Last August, Fitch, one of the major credit-rating companies, had moved the county into the stable category. But its new report, which comes as the county is about to issue $74.9 million in bonds, once again gives a negative outlook.

"It is slower-than-expected progress toward financial stability," said Jessalynn K. Moro, a senior director for public finance at Fitch, in explaining the decision.

Fitch's current rating for the county remains at BBB+, which is three notches above junk-bond status. The rating is important because it determines how much interest a government has to pay to make its bonds appealing to investors; the worse the rating, the more a government pays.

A negative outlook means the county is at risk of a further downgrade of its rating.

The two other credit-rating agencies — Standard & Poor's Ratings Services and Moody's Investors Service — have given the county similar ratings, also with negative outlooks. Both S&P and Moody's recently reaffirmed their positions.

In recent years, the agencies repeatedly have lowered Monroe's ratings.

But Steve Gleason, chief financial officer for the county, said the fact the agencies didn't lower the ratings again is a sign that they have confidence in County Executive Maggie Brooks' attempts to stabilize Monroe's finances. (Really, Steve? I think all signs are pointing to decreased confidence in local 'leadership'. If the agencies had confidence, they'd raise the ratings. We're really not as stupid as you 'leaders' seem to think we are.)

"All three agencies came back with reports that were exactly what we're expecting," Gleason said. "It's going to take some time to establish a track record with the rating agencies. In time, we'll see upgrades." (You gotta love the Rochester area rationalization. "We expected to be labeled as failures... as was the announcement. So we're doing OK." Huh???)

Fitch noted that the county has moved away from its reliance on one-shot revenues to plug budget gaps, such as the use of $35.9 million in tobacco settlement funds in 2003. (And the city of Rochester has just paid $32 million for a boat with a very dubious future.)

But Fitch also noted that Monroe's first financial report this year shows that the county could be running as much as $13.8 million in the red for 2005. And when accumulated deficits from the past are factored in, the county might face as much as a $40 million gap as it plans for 2006.

JGOODMAN@DemocratandChronicle.com

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