County Receives Excellent Credit Rating from Fitch

Marin County has earned another excellent credit rating after a routine evaluation by the global debt rating agency Fitch Ratings – in fact the highest issuer rating the County could have obtained.

The news comes less than three weeks after Moody’s upgraded the County’s credit rating from Aa1 to Aaa – again the highest issuer rating possible – to affirm the County’s disciplined approach to reducing its long-term obligations and to restructure its budget in light of the national economic downturn since 2008.

“It is great to see that the County’s hard work and prudent financial management over these past several years continues to be acknowledged by financial professionals among the major credit-rating agencies,” said Judy Arnold, president of the Marin County Board of Supervisors. “It is a testament to the decisions made by our Board and the collaborative efforts of our County staff.”

In a release dated April 10, Fitch said Marin County earned an “AAA” rating for its implied unlimited tax general obligation. Only one other California county – San Diego – has achieved an “AAA” rating by Fitch. Marin garnered “AA+” ratings for its $110.2 million 2003 pension obligation bonds (POBs) and its $11.6 million 2001 certificate of participation (COP), maintaining the high ratings that they have earned since their inception.

These Fitch ratings confirm similar ratings by S&P and Moody’s over the past few years.

“The ratings reflect the county's strong and consistent financial position, achieved through sound management practices and ability to match revenue declines with spending cuts,” Fitch wrote in its report.

Fitch was impressed with the County’s diligence in maintaining an above average reserve level despite the “proactive” use of reserves to reduce long-term liabilities, including for employee pensions and retiree health. The Marin County Board of Supervisors allocated $46 million earlier this year to pay down pension and retiree health unfunded liabilities. 

Fitch said it was “prudent” that the county anticipates its annual required contribution toward pension costs will be reduced by $2.4 million, or about 6 percent per year, beginning in fiscal 2014 as a result of utilizing reserves to pay down its unfunded pension liability.

Although the County's financial forecast includes an estimated $500,000 budget gap in fiscal 2015, increasing to $3 million by 2018 (absent any action to reduce the gap), Fitch said it believes County management plans to address the minimal gaps with targeted spending cuts and no further staff reductions “appears reasonable given its strong track record.”

The County does not have any general obligation bond debt.