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An A+ might be the highest score possible on a test, but it’s not when it comes to credit ratings.
That’s the grade Allegheny County received when analyzed by two different bond rating agencies for the 2011-12 fiscal year. A+ is classified as an “excellent” score, the highest being classified as “exceptional” at AAA, AAA-, or AA+. Moody's and Standard & Poor's gave the county the same grade a year ago.
Allegheny County Executive Rich Fitzgerald said one of the reasons the county didn’t score higher was because of the amount in the county’s fund balance, or savings account. Fitzgerald said running the county is a $750 million operation and bond rating agencies like to see 5% of that in the fund balance, meaning there should be about $35-40 million in the county savings account. Currently, there is $5.7 million.
“There had been a usage of trying to fund the government with one-time revenue sources,” Fitzgerald said. “Well, that’s a red flag that the rating agencies don’t like to see because it kind of means you’re selling off your assets or you’re not making enough revenue to pay for the day-to-day operations.”
Fitzgerald said the goal is to increase the fund balance by creating steady revenues streams like naming rights and land usage sponsorships as well as Marcellus Shale revenues and royalties.
“I want to make sure that we get it up there, that $35 million mark so that we’re being kind of the standard practice of what you should have,” Fitzgerald said.
To avoid having to pay higher interest rates when borrowing, Fitzgerald said the county approached the agencies with data and proof of its efforts to increase the fund balance.
“We showed them the fact that we increased revenues last year will a one million increase, showed them the fact that we instituted a hiring freeze this year so that there’s stabilization on the expenditure side, we talked about different revenue streams that we’re going to be looking at in the future.”