Wall Street Cuts County’s Credit Rating, Citing Deficit

Citing Ventura County’s persistent budget deficit, a top Wall Street bond-rating agency has lowered the county government’s credit rating, putting more pressure on officials to slash departmental budgets and cut personnel.

“In my view, this is going to mean definite cuts, and that means people, and that’s the hardest thing to do,” said Board of Supervisors Chairman John Flynn.

“I don’t think we have any choice. We don’t seem to be making any progress in reducing our deficit.”

With supervisors set to begin budget study sessions next week, Flynn said he has instructed Chief Administrative Officer Lin Koester to review staffing and management ratios of individual departments.

He said the board can use that information to decide where best to cut to help eliminate a projected $17.8-million budget shortfall.

Standard & Poor’s Investor Services this week informed officials that it had lowered its rating on the county’s $154.6-million pension obligation bonds from AA- to A+.

It also lowered from A+ to A the county’s bond-like certificates of participation, used to finance a new county mental health clinic, medical examiner’s office and other building projects.

Auditor-Controller Thomas O. Mahon attributed the lowered bond ratings to the county’s continuing operating deficit, which has drained reserves over the years.

“We can’t take a penny [out of reserves this year],” Mahon said. “We’ve gone down as far as we can go. We must balance our budget.”

The lower ratings mean that future bonds sold by the county would have to be paid back at a higher interest rate if the county does not resolve its deficit problem, Mahon said.

Last week, Koester said he planned to urge the Board of Supervisors to close the spending gap by slashing departmental budgets--possibly by a 9.2% across-the-board cut. The panel will begin its budget study sessions next week, with final hearings scheduled to commence June 23. The new fiscal year begins July 1.

Koester said the county has been forced to dip into its reserves in the past to balance its budget because legislators have siphoned away $80 million in local property tax revenues over the last five years to help solve the state’s own fiscal woes.

There was some good news for the county this week from bond rating agencies. Both Standard & Poor’s and Moody’s Inc. gave their highest ratings to the county’s $100-million short-term bond issuance.

Each July, the county borrows money to cover its expenses until it collects property tax payments in December and April.