A Wall Street rating agency Monday declined to upgrade Erie County’s credit rating beyond its current “A” status, prompting renewed calls by the county comptroller and the Legislature’s GOP-aligned majority for the Control Board to continue handling the county’s short-term borrowing.
In a bi-annual review of the county’s credit worthiness, Fitch Rating affirmed the county’s fiscal outlook as stable. However, Fitch also cited the county’s “weak liquidity position” and its increasing reliance on cash flow borrowing as reasons for not upgrading the county’s credit rating.
“Despite the administration’s efforts, the county’s inability to obtain a credit rating upgrade is proof that the administration still has a lot of work to do,” said Comptroller Stefan I. Mychajliw in statement posted Monday on the county’s website.
“As I have consistently stated, Erie County taxpayers deserve a government that will borrow money on their behalf at the least possible expense,” Mychajliw added.
His sentiments were echoed in a statement by Republican- aligned members of Legislature who again called on County Executive Mark C. Poloncarz, a Democrat, to concede that the county is better off doing its short-term borrowing through the Erie County Fiscal Stability Authority, also known as the Control Board.
“It has always been the opinion of the majority caucus of the Legislature that the county must borrow through whichever method is more cost-effective. Every year this debate occurs and it is proven time and time again that the Control Board is the better option. The county executive must move this process forward and issue the Declaration of Need, a necessary step to allow the Control Board to borrow on behalf of the county,” the statement read.
However, the administration Monday said the Fitch rating has no effect on the county’s plans for short-term borrowing.
“The Fitch rating is about our long-term bonding, not a one-year note,” said Deputy Budget Director Timothy Callan.
The Comptroller’s Office next week will be seeking authorization from the Legislature to issue a $110 million Revenue Anticipation Note to cover any cash flow shortage the county might experience through early next year.
“The position of the administration throughout this process ... was until the comptroller issues a Request for Proposal – or receives proposals back from underwriters or banking institutions willing to underwrite our bond – it would be premature for anyone to make any decisions about who’s cheaper unless you can see the response,” Callan said.
The Comptroller’s Office received proposals from nine banks Friday and, with its financial advisors, began reviewing them Monday afternoon, according to Brian Fiume, chief of staff for the Comptroller’s Office.
The Comptroller’s Office also is seeking authorization from the Legislature to borrow about $34 million to fund various construction and sewer projects.
Meanwhile, Poloncarz Monday said, despite Fitch’s refusal to upgrade the county’s credit rating, it also shows that the county’s fiscal situation is steadily improving.
“While I am disappointed that Fitch did not upgrade the county’s rating at this time, based on their many positive comments about our fiscal practices and issuance of a ‘stable’ outlook, it shows our hard work managing the people’s tax dollars is paying off and is being recognized by an independent financial source,” Poloncarz said.