Lane County officials were notified last week that Moody’s Investors Service, Inc. independently reviewed and increased Lane County’s General Obligation Limited Tax (GOLT) bond rating from Aa3 to Aa2. This rating is the highest of its kind in Lane County’s history, an improvement in the County’s general credit profile and a reflection of its long-term financial stability. An Aa2 rating identifies an organization as a very low credit risk. Moody’s provides credit ratings and risk analysis of commercial and governmental entities around the world.
“We are focused on and committed to strong stewardship of taxpayer resources in Lane County,” said County Administrator Steve Mokrohisky. “Despite a ninety percent decline in federal funding and the seventh lowest county property tax rate in the state, we are responsibly balancing our budget, while providing critical services for residents.”
A high bond rating allows Lane County to reduce costs to taxpayers when refinancing existing debt and for financing public projects. It is considered a reflection of an organization's quality financial management, lower credit risk and increased capacity to meet financial commitments.
Lane County has been actively working to reduce internal expenses, debt burden and dependence upon reserves while still investing in critical services, such as public safety, in order to increase long term financial stability. For example, due to changes in the employee health insurance program, Lane County has reduced annual costs by over $2 million and is projecting a third year of zero percent growth to the cost to provide medical, dental and vision coverage for employees. The average annual cost increase for similar plans in other organizations is seven to ten percent.
Lane County has also worked to significantly reduce debt obligations that will save taxpayers $2.4 million in interest payments and remove large, ongoing financial obligations. Lane County is also evaluating refinancing its remaining debt to further lower costs to taxpayers.
Moody’s notified Lane County in December 2016 that it was reviewing its bond rating, along with approximately 294 local governments across the United States. Moody’s ultimately upgraded 136 local governments, fewer than half of those reviewed. There are over 20,000 cities and counties in the United States. There were also some local governments being reviewed for possible downgrades.
For several years, independent financial auditor Moss Adams, LLP has rated Lane County as a low-risk auditee. In 2016, the Oregon Secretary of State’s Office removed Lane County from a list of high-risk counties in regard to its financial health due to the County’s efforts to create long-term financial stability. Lane County has consistently stated that it has fewer resources to provide adequate levels of service in some key areas, due to significant declines in federal funding and one of the lowest property tax rates in the state, but that it is responsibly managing limited taxpayer resources that are currently available.
When evaluating an organization’s credit profile, Moody’s reviews many factors of financial health, including: the local economy/tax base; finances/fund balances; management; and debt/pensions. For more information about Moody’s rating methodology, visit www.moodys.com.
Lane County’s previous rating of Aa3 was assigned by Moody’s in 2011, an increase from the original A1 rating first assigned in 1993. Lane County’s General Obligation Unlimited Tax (GOULT) bond rating is also rated Aa2. Governments have two ratings: the GOLT rating represents bonds secured by a limited property tax pledge while a GOULT rating represents bonds backed by the full faith and credit pledge and total taxing power of the local government.