Essex County Scores AA-Bond Rating from Wall Street Agency

Wall Street financial ratings agency Fitch Ratings, citing Essex County's stable financial outlook, raised the county to a AA-bond rating, County Executive Joseph N. DiVincenzo Jr. announced Wednesday.

Fitch Ratings' report, released Monday, said the upgrade “reflects successful budget management” by DiVincenzo and that “measured recurring revenue increases and prudent spending adjustments over the last four years position the county well to maintain its adequate financial cushion.”

DiVincenzo said the report shows the fiscal integrity of his administration.

“Formulating our budget is the most important thing we do each year and my administration has remained vigilant to ensure our budgets are fiscally responsible," said the county executive. "We begin our budget process early, work hard to control costs, are always looking to develop new, recurring revenue and follow a conservative approach that does not rely on any gimmicks or one-shot revenues.

“Bond ratings are like our fiscal report cards. The upgrade from Fitch shows that we continue to move in the right direction and displays the confidence that Wall Street has in Essex County," he added. 

According to the Fitch report:

Management efforts to proactively control expenses, create operational efficiencies and new revenue sources have yielded generally stable financial results during a time of state fiscal pressure and national recession. The county's management of operations within the state-imposed 2 percent tax levy cap was supported by the prudent use of its taxing powers in each of the last 11 years helping revenue to keep up with annual expenditure increases primarily for employee costs. The county also reduced staff by 20 percent compared to 2003 and increased its use of shared services agreements.

The ratings agency also commended DiVincenzo’s initiative to form partnerships to create recurring revenue and set aside funds to offset additional payroll expenses when there is an atypical 27th payroll period in 2015.  

According to Fitch, the 2013 county spending plan is “structurally sound,” thanks to cuts in the operating budget and the decision to leave open positions unfilled unless they are essential to public safety and public health operations.

"The budget does not include any layoffs or furloughs for the fourth year in a row, suggesting additional expenditure flexibility remains. According to management, overall revenues are trending positive again,” according to the report.

The last bond rating upgrade that Essex County received from Fitch Ratings came in March 2007. Essex County’s finances are also reviewed by Moody’s Investors Services, which has assigned Essex County with a AA2 with a "Stable Financial" outlook. From 2003 to 2007, Essex County’s bond rating was upgraded six times after starting at Baa2 with a Stable Financial Outlook from Moody’s.

DiVincenzo said he was pleased with the accomplishment, but is not yet satisfied.

"This is great news, but obtaining a triple A rating continues to be my ultimate goal,” he said.