Owens pursues bond-rate upgrade

Improved outlook for county finances bolsters optimism

Anne Arundel

February 27, 2002|By Lynn Anderson | Lynn Anderson,SUN STAFF

With an improved budget forecast in hand, Anne Arundel County Executive Janet S. Owens traveled to New York City yesterday to two Wall Street bond-rating firms in hopes of landing the best bond rating in the market.

The county's bond rating - and its ability to raise money to fund road, school and sewer improvements - depend upon such annual visits.

Owens and other county officials were scheduled to meet with financiers at Standard and Poor's and Moody's Investors Service, with an agenda that included the county's improved 2002 budget outlook. Owens learned recently that the spending shortfall for the fiscal year that ends in June could be much lower than previously projected - down to $5 million from $20 million.

"We will go up and tell them where we stand and share some of this news, and hopefully they will be as impressed as we are that we are doing a good job," said county Chief Administrative Officer John M. Brusnighan, who was traveling with Owens, Budget Director John R. Hammond and Controller William R. Brown Jr.

County officials had wanted to meet with investment experts before selling bonds worth about $115 million later this year. Money raised through the sale of the bonds will be used to finance school construction, bridge and road projects, and park improvements over several years, Brusnighan said yesterday.

County officials hope that at least one of the two bond-rating firms will give the county a better bond rating, from a good score of "AA+" to "AAA," the best on the market. Higher bond ratings generally translate to lower interest rates for jurisdictions that sell bonds to drum up quick cash.

The county entourage is expected to return to Maryland late today.

Hammond released updated budget figures to county officials last week. He based his report on information provided by the state comptroller's office, which distributes income tax revenue to local jurisdictions.

Despite the good news on the projected deficit, Hammond remained cautious about the county's budget outlook. Hammond warned Owens and her staff that a final report on income tax revenue from the state might not be available until September, several months after the close of the current fiscal year.

Hammond said that a decline in capital gains might result in higher tax refunds to local residents, and therefore less money for Anne Arundel County. In that case, money from the county's $27 million surplus fund could be used to help close out this year's budget books, he said.

School officials, who warned recently that they might need an extra $5.1 million to get through the 2002 budget year, might also tap into the fund.

County officials say they don't want to spend too much of the extra money because they worry that the 2003 fiscal year, which begins July 1, might be difficult because of anticipated unsteadiness in the job market and the national economy. They might need to mine dollars from the fund again next year.

"If the deficit keeps going down, then our position next year is enhanced," Brusnighan said. "We'll just have to wait and see."

County Council members, who are set to receive Owens' budget proposal in May, were sent an e-mail late last week by Brusnighan, who explained the revised budget scenario.

Council member Daniel E. Klosterman Jr., a Millersville Democrat, said he is glad Hammond is taking a conservative stance.

"He took the worst-case scenario," said Klosterman, referring to initial budget forecasts presented by Hammond in the fall. "It's always harder to come back with bad news."

While no elected officials want to wrestle with a budget shortfall, Anne Arundel County is in better shape than some others, Klosterman said. Officials in Harford County recently raised the county's income tax rate by 20 percent to avert a budget deficit. In Howard County, officials might be forced to tap into an emergency fund.

"We are not in anywhere near as bad a shape as some other counties," he said. "I don't think $5 million is that bad, out of a billion-dollar budget. I think we'll be OK."

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