ARLINGTON, Va. ---Arlington County’s economy and its overall financial picture remain strong, County Board Vice Chair Mary Hynes said today, in response to Moody’s Investors Service decision to continue the negative outlook it previously assigned to the County’s bonds.

 

Moody’s announcement impacts many other Triple-Aaa-rated jurisdictions, including nine in Northern Virginia and the Commonwealth of Virginia. Moody’s assignment of a negative outlook to the U.S. government’s debt rating, due to well-publicized issues related to the federal debt limit, triggered its action on Arlington and other local governments.

The financial picture in Arlington is still much stronger than that of most of the nation, and fits firmly within the classic characteristics of Aaa-rated municipalities.

 

“Arlington remains in a strong financial and economic position,” Hynes said. “During the bottom of the economic downturn, the County demonstrated its resilience and diversity. Our key economic indicators outperformed most in the region and the nation. Most recently, despite the threat of federal government budget reductions, private sector investment in the County has increased and housing values have remained stable.”

 

Arlington’s financial reserves and additional resources provide flexibility to respond to potential, unforeseen declines in revenue, Hynes said. “Even in the most difficult times, Arlington has remained committed to funding our reserves, including action this month to increase the County’s operating reserve to 5% of our budget,” she noted.

 

The County’s financial and economic resiliency and focus on long-term planning have helped it weather many other economic storms, including the impact of September 11 and  the federal government’s Base Relocation and Closure (BRAC) process, Hynes said. 

A total of 36 local governments remain on negative outlook based on Moody’s action, including nine in Northern Virginia.  Moody’s has indicated that a locality can remain on negative outlook for 18 to 24 months. 

 

The two other major rating agencies, Standard & Poor’s and Fitch, also have responded to the U.S. government’s debt and budgetary issues, but neither has published reports describing their expected process or impact to municipal ratings.

The County is not currently in the market with any bond issues and has no plans to go to market until mid-2012. The County last sold bonds in June 2011, with very favorable interest rates and market reception.  Any downgrade of the County’s credit rating could result in higher interest rates on future bond issues. The County and its financial advisors are monitoring the situation and market reaction closely.