That is part of the reason Moody’s awarded the county the high score.
“Upgrade of the issuer rating to Aaa reflects a considerable improvement in the county’s financial position that is the result of prudent financial management and growing revenues,” the Moody’s analyst noted in the ratings rationale. “After implementation of new financial policies, expense controls, and an aggressive debt retirement plan, the county’s financial operations and balance sheet dramatically improved.”
Butler County in recent years has been paying about $10 million — the amount was increased in 2015 when the “2020 Economic Development Initiative” plan was initiated — retiring the general fund debt, that stood at $92.3 million in 2009 and will be down to $17.6 million by year’s end.
County Administrator Charlie Young said while the county has no plans to issue general fund bonds, there could be non-general fund debt issued down the road for water, sewer and road improvements. If they come to fruition, the county is likely to be involved in massive interchange work fixing the Liberty Way interchange — rough estimates on that project are $30 to $40 million — and the new interchange Liberty Twp. trustees want installed at Millikin Road, an estimated $80 million price tag.
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He said without having a specific project it is difficult to calculate potential savings on debt, but it could be sizable.
“Interest savings on something that large would be a significant savings,” Young said. “On $100 million that could be $200,000 a year. The difficulty in this is you’re just guessing at so many things, but clearly if you’re going to take on debt it’s going to be cheaper being triple A rated.”
The county upgrade didn’t just impact the county’s ability to get lower interest rates, Young noted it trickled over to entities like the Butler County Port Authority and could benefit outstanding bond issues like those for Liberty Center and water and sewer.
The upgrade will also be a boon to economic development in the county, which means more jobs and therefore more money for local governments to provide services. The county’s Development Director David Fehr said a stable local government is attractive to new businesses for many reasons, not the least of which is the cost for services.
“It helps when we are talking to companies, especially if they are going to be purchasing water from us, or using the county sewer facilities that they know that the government has their affairs in order,” he said. “Businesses like predictability, so I think we can demonstrate that there would not be a need for sudden increases in their cost of operations.”
Fehr said since the Port Authority is currently just a “conduit” to bring in developments — they don’t issue loans to help businesses come here on their own — the rating upgrade won’t effect them at the moment. But they are talking about establishing a revolving loan fund “now that the port is more stable and has a bit of money” and the bond rating would come into play at that point.
Another factor the rating service considers is the county’s cash reserves. As the Great Recession ebbed eight years ago — the county had routinely been using cash reserves to make ends meet — there was only $8.7 million in the reserve kitty, or about 10 percent of the general fund budget. Rogers said the fund currently holds about $50 million or about half the proposed general fund budget for next year.
This is another reason Moody’s issued the upgrade.
“Moody’s ratings indicate to investors the likelihood that they will be paid back in time and in full by the entity that issued bonds. Aaa is our highest rating, and indicates minimal credit risk for Butler County,” Moody’s spokesman Joe Mielenhausen told the Journal-News. “The rating takes into account factors like the county’s tax base size, economy, financial position, management, debt position, and pension liabilities.”