Friday, July 9, 2010

Councilmember Trachtenberg Says Montgomery Moving in Right Direction After Taking Decisive Fiscal Actions

ROCKVILLE, Md., July 8, 2010—Montgomery County Councilmember Duchy Trachtenberg, who chairs the Council’s Management and Fiscal Policy (MFP) Committee, said today that receiving AAA bond ratings from all three rating agencies is a significant indicator showing recent actions taken by the County are putting Montgomery County back onto a fiscally responsible track.

On Wednesday, County Executive Isiah Leggett announced that Montgomery County has retained its AAA bond rating from all three rating agencies. The Executive thanked Councilmember Trachtenberg for her hard work as chair of the MFP Committee, which made recommendations to the full Council to pass new fiscal and reserve policies for the County.

The possibility of a downgrade from the rating agencies was a critical factor for implementing new fiscal policies. In April, the rating agency Moody’s placed Montgomery County on a “negative watch list” due to falling County reserves.

Montgomery County has never received less than a AAA bond rating in 35 years. The rating allows Montgomery to issue bonds for its capital borrowing at the most favorable rates, saving County taxpayers millions of dollars a year. Top ratings are seen as an important endorsement of a jurisdiction’s overall fiscal health.

“It was necessary for Montgomery County to stabilize its finances in order to maintain its AAA rating by Fitch, Moody’s and Standard and Poor’s,” said Councilmember Trachtenberg. “The County as a whole needs to be fiscally prudent to keep our financial house in order.”

On June 29, the Council approved a Six-Year Fiscal Plan and new reserve policies as recommended by the MFP Committee. The balanced Six-Year Fiscal Plan is designed to help the County achieve a structurally balanced budget for future years. The plan seeks to match expenditures to available revenues without any drawdown of reserves. The new reserve policy would gradually increase the targeted total reserve over the next nine years from 6 percent to 10 percent. The policy would lead to less spending by government agencies.

“As governments at every level—national, state, county and municipality—struggle to rein in spending and find a way to maintain essential services, the urgency of sober and serious fiscal planning is inescapable,” said Councilmember Trachtenberg. “As stewards of the County's economy, the Executive and the County Council have shown real leadership and a vision for the future by building our reserves and clearing a path toward balanced budgets. When the current fiscal crisis is finally past, our fiscal plan and actions of the last month will be seen as part of the solution.”

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