Prince George’s County’s credit outlook was revised to negative by Fitch Ratings on Friday ahead of a $30 million general obligation school construction bond sale.
The $25 million of taxable qualified school construction bonds and $5 million of tax-exempt school construction bonds are rated AA-plus by Fitch. The negative outlook reflects Prince George’s struggle to maintain a balanced budget and adequate reserve funds.
The county has had general fund budget deficits since fiscal 2007. Unemployment reached 7.4% in September. Although the county has accounted for about one-third of all foreclosures in Maryland over the past year, the revenue effects have been limited, Fitch said.
The county’s debt burden should remain affordable, but continued reserve depletion and one-time revenue measures will place downward pressure on the rating, Fitch said.
In August, Prince George’s County lost a lawsuit in federal court to furlough workers in an attempt save about $57 million in fiscal 2009. The county appealed the ruling. Union representatives argued the county promised Standard & Poor’s it would maintain reserve levels at the expense of workers’ pay to preserve its AAA rating from the agency, which was affirmed in October. The county appealed the court’s ruling.
Fitch is monitoring the furlough case, said analyst Barbara Ruth Rosenberg. Moody’s analysts Alicia Stephens said the county has set aside reserve funds in case it does not win in appeal and needs to pay the workers.
