AAA credit ratings abound in fiscally sound Utah, but 5 local government ratings under review
SALT LAKE CITY — Utah's long history of sound financial fiscal management should serve it well as the nation weathers its first downgrade of its credit rating.
The bottom line, according to Jon Bronson, managing director of Zions Bank Public Finance, is that "the state of Utah has pretty darn good credit."
The state of Utah's AAA credit rating remains on strong footing.
Salt Lake County, Salt Lake City Corp., as well as the Salt Lake City, Jordan and Canyons school districts enjoy top bond ratings, although each of those entities has been placed under review by Moody's Investors Service for possible downgrades.
That would make it more expensive to borrow money.
Darrin Casper, chief financial officer for Salt Lake County, said the county's AAA credit rating with three rating agencies is intact, but it has been swept up amid growing concern over Standard & Poor's dropping the federal government's credit rating to AA+.
"With the federal downgrade, there's certainly potential risk to our county. Most of the rating agencies have a standard that says if the sovereign you live in has a downgrade, they have to review you as well."
The county has strong fund balances and solid management practices.
"We have a culture of being financially conservative. It's imbedded in our policies and our practices. Making sure we can make our debt payments is at the top of our list," Casper said.
The county has a long tradition of managing taxpayer resources well, he said. "Nothing has changed from our perspective other than the national economy and this national crisis. If we're drawn into this, it's because of that," Casper said.
Janet Roberts, business administrator for the Salt Lake City School District, said the district has a conference call with Moody's officials planned for today.
In the past year, the district received a AAA rating from two agencies, including Moody's. "We do an impeccable job. We're just caught because of the federal government downgrade," she said.
"When they take a good look at us, we're going to be fine."
On Friday, Standard & Poor lowered the nation's AAA rating for the first time since granting it in 1917. The move came less than a week after a gridlocked Congress finally agreed to spending cuts that would reduce the nation's debt by more than $2 trillion. The promised cuts were not enough to satisfy S&P.
The state of Utah has a long history of solid financial management that has served it well over the years, Bronson said. "The state has been very proactive in taking care of its pension and retirement obligations."
Moreover, it borrows money over short periods of time — six to seven years for buildings and no more than 15 years for highway projects. "We don't stay in debt very long and that gives you great flexibility down the road," he said.
The rating agencies were particularly impressed with the Legislature's efforts to identify budget cuts if state and federal revenues did not materialize as anticipated. Utah was unique in that degree of due diligence, according to Bronson. "They were quite impressed by that," he said of the rating agencies.
Utah is no Johnny Come Lately in sound fiscal management. That track record makes it easier to make a case for its continued ability to borrow money at the best rates.
"It's not a short-term perspective. The Legislature has taken a conservative approach for many years. It's actually a history of conservative budgeting and spending practices over a long period of time that impresses the rating agencies," he said.
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