Few aspects of modern life are as tedious as matters of finance.
Sure, everyone understands what goes into taking out a five-year car loan then paying it off with interest in installments over the next 60 months. Credit cards are a little bit more complicated, and terms vary.
Mortgages are something of a break point. Just about every homeowner has to make a monthly mortgage payment and has a vague idea that ratio of interest to principal in each payment varies with each passing month, but very few of us understand how the loan amortization schedule was derived.
Matters of government finance can make a mortgage payment schedule look like grade-school arithmetic, so it's easy to understand just how underwhelming news of Harford County getting good ratings from national investment rating services can be such a good cure for insomnia.
Still, it is a pretty big deal that Harford County's bond rating from Standard & Poor's Rating Services improved from AA+ to AAA while the other two rating firms held steady at high ratings of Aaa and AAA. Just the rating scales make the subject matter very dense from the perspective of the average person.
It's as if no government can have a rating of B- or C+ so there's some oblique variation of A assigned lower scores. Heck, AA+ not only seems pretty darn good, but also it seems like it could be every bit as good as AAA.
So in any event, the curve on which bond ratings are graded put Harford County in the same league as other wealthy Maryland counties, including Howard and Montgomery.
What this means to those of us who make up the hoi polloi actually is quantifiable.
A shift in the right direction means the interest rate the county has to pay to the retirement plans and other big investors that purchase municipal bonds will end up being a fraction of a percent lower.
On the sale of $40 million in bonds that occurred Tuesday, such a shift means as much to the county as a shift of a half of a percent in home mortgage rates means to an individual, which is to say, a lower regular payment on the bonds in question.
The low interest rate bid on the 20-year bonds was 3.0465 percent.
The lower the interest rate, the lesser the burden on the county's annual budget, which means more things built through long-term financing – like park facilities and school buildings – can be afforded. It's kind of like being able to afford a bigger house when mortgage rates are low.
To a some degree, Harford County's good bond rating is a function of geography; being close to a wealth of federal government jobs provides the county with a solid economic base. The relative wealth of the county is among the issues taken into consideration as well. Similarly, the decent fiscal stewardship on the part of the county's elected and appointed officials no doubt came into play.
It may be as boring a number as is out there when it comes to paying attention to government, but local bond ratings are certainly worth a second look when they are derived each year. When they start moving in the other direction, there is cause for concern, but if the ratings are good and getting better, that's a positive development.