The three bond rating agencies have reaffirmed Fairfax County’s Triple A bond rating. However, one agency again has tagged the county with a “negative outlook.”
Moody’s Investor Service said it assigned the negative outlook based on Fairfax County’s reserve levels, which it said are below average compared to other AAA-rated entities. The agency also made note of the county’s ongoing challenges in balancing its budget and what it said is the under-funding of the county pension system by $48.3 million.
County leaders are disputing the negative outlook assignment.
“This designation is based on Moody’s overemphasis on reserves and a change in their ratings criteria and does not indicate deterioration of Fairfax County’s fiscal management,” Board of Supervisors Chairwoman Sharon Bulova said in a news release.
Regarding the pension system, a statement issued by the county states that the county has continued to fund its pension systems in accordance with the guidance of its actuaries and in line with county code. The county also increased its contributions to the pension fund in recent years to make up for weak market returns in fiscal 2008.
“Moody’s action discounts this historical trend of appropriately funding the County’s systems as well as the County’s deliberate action to increase funding to its pension systems over the past few years,” the county statement reads.
Maintaining a AAA bond rating, which the county has done since the 1970s, saves the county millions in borrowing costs. Moody’s last assigned a negative outlook to Fairfax County, along with several other jurisdictions, from August 2011 to July 2013 due to the county economy’s dependence on the federal government. According to county officials, that designation had no appreciable impact on the county’s borrowing rates.
Gov. Bob McDonnell (R) gave the final “State of the Commonwealth” address Wednesday, speaking on the first day of the Virginia General Assembly session. Gov.-elect Terry McAuliffe (D) will take the oath of office on Saturday.
McDonnell used the speech to highlight his signature initiatives on transportation, job creation and education, calling out the legislators that carried his bills for him in the General Assembly.
“The wise and frugal government envisioned by Jefferson manages and funds its core functions well, and leaves the rest to individuals, the family, faith-based and benevolent institutions, and the private sector,” he said. “It’s a balance, and by most empirical measures, we’ve struck the right one in Virginia.”
At the end of his speech, McDonnell apologized for the ethics controversy that has plagued his administration over the last year, although he again stated that all of his actions were legal.
“I have prayed fervently that the collective good we have done over the past four years will not be obscured by this ordeal,” he said.