Howard County is preparing for the county's $200 million bond sale Tuesday, buoyed by a AAA credit rating the county just earned from all three major bond rating agencies.
This marks the 14th consecutive year that Howard County has earned the stellar rating that typically translates to lower interest payments on debt. County Executive Ken Ulman, a two-term Democrat, had earlier expressed concern that Howard might be affected after Standard & Poor's downgraded U.S debt.
"This is not just about borrowing at a lower rate," Ulman said last week. "It is the gold standard of the business community. The message it sends is that we are running a fiscally prudent, responsible government."
The bond sale will allow the county to reimburse itself for major capital expenses, including $14 million in school projects, $20 million in water and sewer improvements and nearly $35 million for the purchase of the Ascend One building in Columbia, which the county had been leasing.
The bond agencies were impressed, Ulman said, with the county's educated workforce, high-paying jobs, low unemployment rate — now 5.5 percent, far below state and national levels — and the jobs outlook for area residents. The rating also reflects Howard's solid fiscal management, he said.
"The stable outlook reflects Standard & Poor's expectation that management will likely continue to budget conservatively and maintain … stable reserves in light of difficult economic conditions," according to the bond company's report.
Montgomery and Baltimore counties also have AAA credit ratings from the three major agencies; Harford County has the designation from two of the agencies.
The bond agencies came to Howard County and met with officials, who usually travel to New York City for the sessions.
"We really worked overtime to convince the bond agencies of our conservative management," Ulman said. "We clamped down on spending and we were upfront about our challenges and how we were handling them."
The county maintained its AAA rating because it showed Moody's, Standard & Poor's and Fitch Ratings its ability to weather changes in the economy, said Stan Milesky, Howard's financial director.
"The agencies do a very thorough job in determining the rating," Milesky said. "They look at government, the local economy, the nature of the workforce. They found that the county is in good financial shape with strong reserves. We have demonstrated strong financial management and have controlled costs."
Howard's jobs outlook is bolstered by the expansion at Fort Meade in neighboring Anne Arundel County. The Army post is expected to add about 21,000 new jobs through 2015 as part of the nationwide military base realignment known as BRAC.
Representatives from Moody's will return to the county next month to evaluate any exposure Howard workers might have to possible reductions in the federal government's workforce. While many Howard residents are employed by the National Security Agency and the Social Security Administration, those two federal agencies may be insulated from any immediate cutbacks, Milesky said.
"It would be a double challenge for us if there if there is a contraction in federal spending," he said. "But in many ways, this discussion with Moody's is premature. We can make a strong case that these agencies will be less affected by any contraction in the federal government."
Looking forward, overall economic performance is not expected to improve significantly in the next year, officials said.
"We know that we are not out of the woods," Ulman said.
As president of the Maryland Association of Counties, Ulman helped organize the jurisdictions' 24 finance directors into a group that now meets monthly to discuss economic challenges and develop strategies that address the housing crisis, foreclosures, reduced revenues and unemployment.
Even after 14 consecutive years of high ratings, Ulman said, complacency is not an option.
"You cannot take these ratings for granted," he said. "The U.S. government took its AAA rating for granted, and look what happened. And they have a printing press. We don't."