Dane County has fallen from the ranks of one of only a handful of counties across the country to receive the highest “AAA” bond rating.
According to a statement from the office of Dane County Executive Kathleen Falk, investment services Moody’s and Fitch Ratings have given Dane County a bond rating of “AA.”
The fall can be attributed to the severe economic recession facing the nation, the statement said.
“The downgrade reflects the deterioration of general fund revenue levels beginning in late fiscal 2008 and continuing through fiscal 2009, primarily due to the ongoing economic downturn,” Fitch Ratings wrote in the statement.
Joshua Wescott, executive assistant to Falk, echoed Fitch Ratings’ assertion the economic downturn is the cause of the loss in rating.
“It is directly attributed to what we are seeing in the economy,” Wescott said. “We are certainly not unique at the county level. All local government are feeling it, all local businesses are feeling it.”
Wescott detailed a number of effects the economy has had on Dane County in addition to the loss of the bond rating.
According to Wescott, sales tax is down 25 percent from what it was last year, and this adversely affects programs depending on the tax. In addition, a dramatic fall in building permits has been seen this year, a total of about half a million dollars.
Dane County residents are also directly feeling the economic pinch.
“More and more people are falling behind on property taxes … [the economic factors] are making it very difficult for the county,” Wescott said.
According to the 2009 adopted budget for Dane County, property taxes are the second largest source of operating revenue for the county, with the operating levy for 2009 being a little less than $120 million. Intergovernmental revenue, such as state and federal grants, account for the most revenue, with 2009’s adopted budget totaling approximately $189 million.
In light of the loss of bond rating, Wescott said the real effect relates to the county’s borrowing practices for large projects. For example, this year the county is looking to build a big nursing home in Verona and doing extensive highway work.
The loss of rating means the county will have about $25,000 more over 20 years on the $25 million it is expected to borrow this year.
According to Wescott, Falk’s budget — to be proposed Oct. 1 — will have to contain some savings, and Falk will continue to look for efficiencies and tap into new revenue sources to curb the detrimental economic effect on the county.
“We have to continue budgeting prudently,” Wescott said. “Property taxes are hitting people pretty hard. We have to achieve efficiency without a higher reliance on property taxes.”
The county has already taken some measures regarding the economy. Wescott said the county has undergone hiring and travel freezes, had some cut in pay for some positions and has been working with unions for pay concessions.
“We can control the county level, but we can’t control the national economy,” Wescott said.
