NEW YORK -- Despite the faltering economy and a recent history of large annual increases in borrowing, Maryland municipalities continue to maintain excellent credit ratings, according to a special report published yesterday by Moody's Investor Services.
The report is one of several that Moody's is in the process of preparing because of the recent financial upheavals in various cities and states across the country. New York, Philadelphia and, most recently, Bridgeport, Conn., have all gained widespread notoriety because of faltering finances.
"This has been an extremely difficult year for municipalities," Moody's Assistant Vice President Michael Johnston said. "While Maryland has certainly experienced a tougher period than it has in a while, the story behind this report for us is that the state, in general, has managed well."
About 43 percent of Maryland's communities have ratings that Moody's considers high-grade -- AA or better. That compares to 30 percent for the mid-Atlantic region and 18 percent for the nation. "The ratings distribution in Maryland is probably more favorable than in any other state in the country," Mr. Johnston said.
Moreover, although Moody's has downgraded 244 municipal issues nationally, 51 of them in this region, since January 1990 -- "far more than in recent years" -- all of Maryland's communities have had stable ratings, and that is expected to continue at least for the remainder of this year.
The report attributes Maryland's favorable position to a diverse and stable economy, sophisticated financial management by state and local governments, and a personal income level that is 20 percent above the national average.
That has compensated for the state having a debt burden per person, and in relation to the tax base, that is slightly above the national average, Moody's concludes.
Still, the state may have to modify its ways. Since 1987, Moody's reckons the overall level of debt for the state's 23 counties and the city of Baltimore has soared from $320 million to $570 million, an annual increase of more than 21 percent.
Now, many of the state's communities have begun reviewing capital programs with the intent of reducing debt.
The report was released yesterday in connection with an upcoming conference of Maryland's public finance officers.
The first edition covers all Maryland's counties and the city of Baltimore, but looks in detail only at Baltimore and nine counties.
A full survey will be released in several months.