First America, Now Bucks County? Marseglia Says AAA Rating is in Danger
By Brittany Hundzynski, Contributing Writer
Since Standard and Poor’s downgraded U.S. credit earlier this summer, credit ratings have become a campaign issue. Now, candidates in the bellwether Bucks commissioners election are duking it out over the County’s financial standing.
Moodys has granted Bucks a AAA status two years in a row under Republican leadership, but Dems argue that recent decisions have put the county’s fiscal health – and bond rating – in question. (Fitch’s and Standard and Poors each rate Bucks County as AA+).
At a recent Commissioners’ meeting, Democrat Diane Marseglia brought attention to the risks of overspending the County’s rainy day fund, as majority Commissioners Charley Martin and Rob Loughery seek to offset a revenue gap, balance the county budget and avoid tax increases.
“I have pointed out numerous times that my colleagues on the Board of Commissioners are putting our county at risk by dipping into our rainy day fund. Just in the 2011 budget, they borrow $8 million from the rainy day fund and now they want more to build their courthouse,” Marseglia said. She believes that cutting spending – namely the county Office of Public Information – would help close the gap.
According to Moody’s Investors Services a county should have a cash reserve equal to at
least 10 percent of its functioning budget to retain a AAA bond rating.
Currently the county functions with a budget of $456 million and the rainy day fund consists of about $50 million. Marseglia argued that if the county were to spend the exact amount from the rainy day fund that it did in the recent year, make up what it borrowed for the budget, and add a few million for the proposed bond issue that it would lower the fund to $30 million, making it below the 10% percent needed to have a strong bond rating.
Loughery emphasized that Republicans had taken the long view – saving up the rainy day fund for precisely such an economic downturn as the country has experienced.
“That surplus fund, which is taxpayers money, was built up strategically by Republican Commissioners, while not raising taxes in the past five years, to strengthen the county’s financial position,” Loughery said.
He argued that the priority was keeping taxes low.
“Our current general fund balance exceeds the recommended balance of reserving 10 percent of the total operating budget. Last year, rather than raise taxes to close the gap in the budget by declining revenues from state and federal government, the Republican Commissioners used the resources from the surplus fund. We believe this is taxpayers money and should be used in these circumstances, rather than raising taxes.”
Chester, Cumberland and Montgomery Counties also enjoy a AAA rating.
Keegan Gibson contributed to this report.