Some in county anxious about its credit

By Justin Boron

Economic uncertainty over Delta Air Lines - Clayton County's number one taxpayer - and cash reserves that fall below financial guidelines have some county officials concerned that the government's 16-year old credit rating may be slipping.

A drop in its rating, which gauges the county's ability to repay debt or financial obligations, could have a severe effect in how it does business with outside companies and weaken the quality of interest rates it gets in bond issuance, said Mike Stewart, the assistant director of administration at the Association County Commissioners. Higher interest rates on debt would consequently elevate taxes and the cost of services paid by the county's citizens, he added.

"It's like your own personal credit," he said "It's pretty much going to affect all your business dealings."

County Commission Chairman Eldrin Bell insists that the credit rating is sound, saying the questions surrounding Delta were yet to be determined.

"They're not realities," he said.

Dan Martin, the director of finance, said the county's two credit rating agencies have not informed him of a potential slide in their view of the government's financial stability.

Nevertheless, two commissioners have raised concerns about the strength of a $9.8 million cash reserve against the threat of losing two of its major tax contributors - Delta and Hertz Rent A Car.

At a recent budget meeting, Commissioner Charley Griswell said the $9.8 million reserve fund was lower than it should be.

Likewise, Commissioner Wole Ralph said he would like to see the fund bolstered by maintaining tax rates or even possibly raising them.

"I was surprised that we didn't dedicate additional money to the reserve," he said. "I would like to see us build up the reserve because of potential financial issues," he said.

If the county adopts the $136.6 million budget Tuesday, its reserve would represent about 7.2 percent of that budget.

Martin said he would like to see the reserve closer to 10 percent, as recommended by Moody's Investors Service and Standard & Poors Rating Services.

"We'd love to have it at $13 million," he said.

The two agencies have maintained the county's AA rating, since 1989, he said. AAA is the highest rating.

The 10 percent guideline, which he said is unofficial, allows for about two months of expenses set aside for emergencies or to pay bills before anticipated revenue is collected.

Stewart said his government association actually suggests a county keep about 90 days worth of expenses in its reserve.

Bell said he has a plan to boost the fund balance but was not ready to make it public.

He also downplayed the concern about the credit rating, saying the recent conversations were focused on the hypothetical. Bell said there was no need to go "alarming the public that our credit rating is going to slip."