Hello, Mr. Bond: Moody's Hikes Essex County's Rating

Essex County’s bond rating is looking up.

Officials announced last week that Moody’s Investors Services raised the county’s bond rating to “Aa2 with a positive financial outlook.”

The new rating is an upgrade over the previous rating of “Aa2 with a stable outlook,” which was issued in 2007, county officials stated in a news release.

Moody’s downgraded Essex County’s bond rating to “Baa2 with a stable financial outlook” in November 2002.

Moody’s assigned the upgraded bond rating to the issuance of $43.55 million of General Obligation bonds to refinance existing debt issued for capital improvement projects for the county from 2010, Vocational Technical School District from 2007 and Essex County College from 2008, officials stated.

According to the Moody’s report, dated March 11, 2016:

“The county’s financial management practices are strong given conservative budgeting of revenues and expenditures. The county incrementally raises the property tax levy every year and controls discretionary spending in order to meet rising fixed costs.”

Moody’s issued a second financial report for Essex County on March 11 for $25 million of Bond anticipation notes that will be used to partially pay for the construction of the new Essex County Congressman Donald M. Payne Sr. Vocational Technical School Campus.

• See related article: New Vocational Tech School Breaks Ground In Newark: Essex County's Donald Payne Honored

According to officials, the Moody’s report attributed Essex County’s financial health to its fund balance, which Moody’s estimated will reach about $76 million in 2016.

The fund balance has improved Essex County’s cash flow and allowed the county to avoid using Tax Anticipation Notes (TANS) since 2013, officials said.

“The upgraded bond rating will help save Essex County millions of dollars in interest and insurance costs when it sells bonds, and will help make its bonds more attractive to private investors,” county officials stated in a news release.

According to county officials, another fiscal initiative that has “helped restore the confidence of Wall Street in Essex County” is a comprehensive debt restructuring that occurred in 2007.

“Essex took advantage of low interest rates to refinance its existing debt without extending the deadline to pay off the debt,” county officials stated. “In addition, it set a policy to not exceed a total of $20 million in annual capital spending.”

“Improving the financial strength and stability of Essex County is the most important initiative that we have undertaken, because without fiscal health it’s impossible to make an impact anywhere else,” Essex County Executive Joseph DiVincenzo Jr. said. “Our conservative fiscal approach has always been about introducing balanced and responsible budgets, avoiding one-shot revenues and finding recurring revenue sources, and building our fund balance. These steps have helped us avoid budget deficits despite rising health benefit and pension costs, and save money on interest costs.”

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