Moody’s Says Short-Term Loan Rating Looks Stable

After meeting with its officials Friday, a Wall Street analyst said he expects Ventura County to retain its prime credit rating on short-term loans, a key component to keeping county government afloat until property and sales taxes kick in.

A contingent of local leaders--including interim Chief Administrative Officer Harry Hufford and Supervisors Kathy Long and Judy Mikels--traveled this week to New York to convince credit rating agencies and investors that the county is doing all it can to address ongoing financial problems.

While a final decision is not expected until next week, Kevork Khrimian, a senior analyst with Moody’s Investor Services, said he expects the county’s short-term rating to keep its MIG-1 status, the highest possible municipal bond rating.

“They gave us quite a bit of information to show that they have put together a budget that is balanced for the next year,” said Khrimian, who met with county leaders Friday morning. “As far as I could tell, there really is no reason to think they wouldn’t get a MIG-1.”

That’s good news for county officials, who each year borrow between $75 million and $100 million to supplement cash flow while waiting for tax revenue to reach county coffers. A lower credit rating would result in a higher interest rate for borrowing that money.

Leaders worried that the short-term rating might be affected by Moody’s decision last month to downgrade the county’s long-term credit worthiness. The company informed local officials that it had lowered the long-term rating from A-1 to A-2 with a “negative outlook,” which would make it more costly for the county to borrow money for long-term projects.

The decision was based on the county’s years-long trend of spending more than it takes in. Specifically, Moody’s pointed to the county’s current $5-million budget shortfall and its $25-million debt stemming from a Medicare billing scandal.

County officials are hopeful that the positive news presented this week will prompt analysts to restore the long-term rating to its previous status.

“I think we went a long way toward helping restore our rating,” said Board of Supervisors Chairwoman Long, who led the the local contingent to meetings with Moody’s and the Standard & Poor’s Corp.

“I think they wanted to hear directly from the board that we were going to make the necessary fixes,” Long added. “Not just a shell game, not smoke and mirrors, but solid fixes.”

For the last several months, supervisors say, they have been doing exactly that.

They hired Hufford in January on an interim basis to turn around a government structure that had fallen into debt and dysfunction in recent years. Since then, the retired Los Angeles County administrator has concentrated on reining in spending.

He has proposed $12 million to $15 million in cuts for next year’s budget and has dealt forcefully with department heads who have resisted his efforts.

Earlier this week, supervisors unanimously backed Hufford’s plan to strengthen the role of the chief administrator, giving him control over nearly every aspect of the county government’s finances and leadership.

This week’s meetings in New York were an extension of the ongoing effort to shore up the county’s finances.

In addition to Hufford, Long and Mikels, County Counsel James McBride and Auditor Tom Mahon made the trip. County Treasurer Hal Pittman, who handles the county’s investments, had also been scheduled to go but canceled after falling ill.

Assistant Auditor Christine Cohen said the county intends to get a refund for Pittman’s unused ticket, which cost $3,189.

Pittman was scheduled to travel business class, allowed by county policy when flights are longer than two hours. His ticket was even more expensive, she added, because he had not planned to stay over Saturday night and therefore was not eligible for reduced fare.

With the short-term rating all but secured, county leaders said they will now turn their attention to restoring the county’s long-term credit worthiness.

Given the county’s relatively low reliance on long-term bonds--it has only $30 million in outstanding debt in the category affected by the credit rating--the lower rating is not expected to have an immediate impact.

But with a planned $63.5-million juvenile justice facility on the horizon--the county’s share is $23 million--officials say it is essential to restore the A-1 rating before it is time to finance that project, which will probably be sometime in the spring.

“We need to have the negative watch off and as strong a rating as we can get before that project comes forward,” Long said. “As long as they know we are on top of all the issues, and working to solve them, they will look at us positively.”