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County credit rating gets a boost

Standard & Poor's Rating Services on Thursday boosted its assessment of Erie County's finances.

The Wall Street rating agency increased its rating of the county's general obligation bonds from BBB to A- based on "its recent history of positive operating results."

The agency also affirmed the county's "stable" outlook.

"The stable outlook reflects our opinion of the continued improvement in the county's financial position and its strong reserve levels," analysts wrote in a report on the rating upgrade. "In addition, the growing diversity of the local economy, which helped mitigate some of the more severe recessionary impacts, provides further rating stability."

It also warned that the county's reliance on "economically sensitive" sales tax revenue and the fact that the county's largest union hasn't had a new contract since 2006 continue to be risk factors.

The report cited several factors in the rating increase, including the advisory status of the Erie County Fiscal Stability Authority, a four-year plan that calls for "minimal use" of the county's fund balance for operations and a stable economic base with a "below-average unemployment rate" and continued growth in "taxable assessed value."

It also noted that officials expect to end 2011 with a budget surplus.

"I'm glad to see that S&P has, again, recognized the financial progress that Erie County continues to make," County Comptroller Mark C. Poloncarz said in a statement announcing the rating increase.

The rating agency's report noted that sales tax remains the county's largest source of revenue. Sales tax pays for about 53 percent of county operations, state aid accounts for 29 percent and local property taxes account for 16 percent.

"While sales tax growth has historically been sufficient to offset rising costs, continued expenditure growth could pose a risk to future fiscal balance, in our opinion," the Standard & Poor's analysts wrote.