Moody's upgrades Wayne County's credit rating
Wayne County's credit rating has been upgraded to A3 by Moody’s Investor Service, a move fueled by years of fiscal improvements, the agency said.
Moody’s released the report Tuesday, announcing the improved rating of A3 from Baa1. The company uses a scale ranging from Aaa to C, with 21 notches in between. These rankings indicate Moody’s opinion of a given entity’s credit quality or general creditworthiness.
An improved credit rating can allow a municipality to negotiate more favorable borrowing terms.
Moody's said the upgrade in the county's credit rating "... reflects the county's material bolstering of operating fund balance and liquidity aided by restructuring of retiree benefits which greatly reduced the county's annual fixed cost burden. Also considered is an expanding tax base, which creates some cushion against the state's strict property tax caps ..."
The county eliminated a $132 million accumulated deficit and restructured $1.5 billion in pension debt.
Moody’s findings also suggest the rating could improve further if Wayne County sustains economic growth and expands its tax base.
“The positive outlook reflects the likelihood that the county's credit profile will continue to strengthen based on its strong financial position,” the report said.
The county in a statement Thursday praised Wayne County Executive Warren Evans for the improvement, specifically his “fiscal management” and “operational restructuring.”
Evans took over as executive in 2015 and was facing a looming financial crisis, with Gov. Rick Snyder declaring a financial emergency in Wayne County. The county entered into a consent agreement with the state. After 14 months of cuts and significant changes to the retiree pension system, the state allowed the county to exit the agreement.
Specifically, between 2015-17, the county reduced unfunded pension liabilities from $798 million to $636 million and other retirement benefits from $1.32 billion to $194 million.
“When I first came to office, we had to make tough decisions to set the county on a sound financial course,” Evans said in the release. “Now, we are seeing the fruits of those decisions. Wayne County is a good investment because of the decisions we made. Those decisions are saving taxpayers money in the form of lower financing costs the county incurs during its normal operations.”