By David Pendered
Analysts with Moody’s Investors Service thought enough of DeKalb County CEO Michael Thurmond’s promise to balance the county’s budget to include the promise in their credit analysis of the county.
It’s only only a passing comment. But given the gravity of these credit analyses, its inclusion in the July 18 report is noteworthy:
- “While county management has demonstrated a recent willingness to match revenues and expenditures, the county has failed to comply with it’s adopted one month fund balance target for its tax funds. As of January 2017, the county has a new Chief Executive Officer, who has stated a commitment to meeting policy targets.”
DeKalb ended it’s last fiscal year on Dec. 31, 2017 with nearly two months of operating revenue in its reserve fund, according to a statement issued by the county. The reserve fund for the current year was set at $75 million in the $1.2 billion budget county commissioners approved in February, according to another statement.
Thurmond didn’t comment on the credit analysis in a statement his office issued Tuesday. But in response to an unrelated rating action by Moody’s, which raised the county’s fiscal outlook from stable to positive, Thurmond observed:
- “The improved outlook shows that DeKalb is getting its fiscal house in order. Our efforts to eliminate deficit spending, rebuild cash revenues and reduce the burden on county taxpayers are important steps to support long-term economic growth in DeKalb.”
The rating action involves a sale of bonds that began Wednesday. DeKalb is selling $43.5 million in debt that it plans to pay off in full by Dec. 19 with taxes that are to be collected later this year, according to a report by emma.msrb.org. The U. S. Securities and Exchange Commission has designated EMMA as the official source for municipal securities data and disclosure documents.
The annual interest rate on the short-term notes is 2.5 percent. A total of three trades had been executed by late afternoon Tuesday, for a total of $8.2 million, according to the EMMA site.
DeKalb’s reliance on deficit spending was cited in Moody’s credit analysis. DeKalb’s short-term borrowing is on a downward trend, which is a positive. It means the county can pay more of its bills on time, without having to borrow money to make the payments.
The $43.5 million borrowed this year compares to $70 million issued in Fiscal Year 2017 and $157 million in FY 2012, according to the credit analysis. DeKalb’s fiscal years begin Jan. 1 of a given year.
Moody’s portrays DeKalb’s financial position as improving, but still not out of the woods:
- “DeKalb’s financial position remains narrow for the rating category, although it is much improved following a period characterized by negative fund balance and operating deficits.
- Since fiscal 2012, the county has reported surpluses across the tax funds (general fund, special tax district funds, hospital fund, fire fund, and debt service funds) in four of the last five fiscal years. In fiscal 2017 (audited), the tax funds saw a $27.2 million surplus, increasing available fund balance to $50 million, or 8.9 percent of revenues.
- While reserves have increased notably in recent years, current levels are well below the median for Aa3 rated counties.”