By Joel Hall
The Clayton County Board of Commissioners hired Jerry Cutrer this week to serve as the county's financial advisor and help it maintain an Aa2 credit rating with Moody's Investors Service. Cutrer, however, said he believes the county will need to re-evaluate its finances and determine whether it can afford to meet the demands of Moody's.
In December, Moody's, which ranks the credit-worthiness of commercial and government entities, put Clayton County on a watch list for a possible downgrade of its credit rating. In a Dec. 22 report, Moody's said Clayton County's fiscal 2008 was "structured to maintain [a] general fund balance at a healthy $42.8 million," but that "sizable expenditures" within the last year had put the county's fund balance at risk.
The report further states that "the rating action affects $51.9 million of rated debt, including revenue bonds secured by the county's unlimited tax pledge and issued through the Clayton County Development Authority, Housing Authority, and Urban Redevelopment Agency."
Cutrer, 65, who has a 33-year career in municipal finance and real estate development, said he will meet with county officials for the first time on Monday to begin devising a plan of action. However, he said the county will have to weigh the benefits and consequences of bringing its fund balance to a level that satisfies Moody's standards for an Aa2 rating.
"Moody's has indicated that the county does not presently meet the standards for an Aa2 rating," Cutrer said. "[The county] would like to maintain that rating, but in order to do that, the county is going to have to do some things. One of those things, apparently, is to restore some of the general fund reserves that they drew down from last year. That money was for a rainy day, and right now, it is a rainy day.
"Right now I'm in information-gathering mode," he continued. "Every municipality and county in Georgia is having a hard time right now. My guess is that the county doesn't have a big budget to rebuild that reserve. My job is to see if the county can afford to do everything that Moody's wants."
On Thursday, Cutrer said he did not yet have an accurate assessment of the county's total debt, nor the amount of money in the county's reserves. Attempts to reach County Commission Chairman Eldrin Bell by phone Thursday for that information proved unsuccessful. When reached by cell phone, Finance Director Angela Jackson told a reporter to leave his phone number with her assistant. Several messages were left with the assistant, but a returned phone call was not received.
Other concerns listed in Moody's Dec. 22 report are that Delta Air Lines supplies 8.3 percent of the county's sales tax revenues, and that the county has a 9.9 percent foreclosure rate, and a 7.8 percent unemployment rate.
Cutrer said that if the county were to lose its Aa2 credit rating, financing projects on the six-year, 2008 Special Purpose Local Option Sales Tax list may prove to be more expensive. However, he believes that if the county does lose its credit rating, it still has options.
"The SPLOST is in place and they are going to collect it over several years," Cutrer said. "About a fourth of the projects, [the county] would like to fund with bonds, but they haven't made that decision. They could wait and do that all with taxes.
"If the county's rating is downgraded, it may be disappointing, but it won't be the end of the world," he added. "We have to figure out what the county can afford to do and go from there. This is by no means an impossible task, but we just have to gather information, and let the commissioners use their good judgment."