BRADENTON, Fla. — Florida’s largest county, Miami-Dade, got a boost when Moody’s Investors Service on Valentine’s Day revised its outlook on the county’s credit to stable from negative.
The move affects $1.4 billion of general obligation bonds and $1.6 billion of non-ad valorem obligations rated by Moody’s, which also affirmed its Aa2 GO bond rating and Aa3 non-ad valorem ratings.
Moody’s negative outlook had been in place since at least August 2010 due to the county’s materially weakened financial condition as a result of the depressed economy.
On Thursday, analyst John Incorvaia said the return to a stable outlook reflects Miami Dade’s stabilizing economy and tax base, “as well as management’s ability to effectively re-align budgetary imbalances, while recognizing ongoing financial challenges in providing service-level requirements to a poor residential base.”
“Moody’s believes that county financial operations have stabilized since fiscal 2010, following two years of budget imbalances, with officials taking actions to reduce costs,” Incorvaia said.
In fiscal 2013, the county cut the operating tax rate by 2% and is expected to produce balanced operations, while maintaining or marginally improving contingency funds due partly to nearly 2% growth in the tax base and $158 million in annual recurring savings through negotiated labor concessions, he said.
Miami-Dade County’s nearly $6 billion budget for fiscal year 2013 includes the use of around $42 million in one-time revenues.
Challenges for fiscal 2014 include an additional $50 million contribution to transit for increased debt-service payments, potentially increased health care and pension contributions, a $5 million payment toward a $25 million loan from the water and sewer department, and offsetting the use of one-time operating funds in fiscal 2013, according to Incorvaia.
“The county has some additional revenue flexibility in the tax rate and some other minor county fees, but flexibility is limited,” he said.
County officials could not be reached for comment about Moody’s outlook change.
A market expert said the revision to a stable outlook indicates that strong management efforts to shrink the budget are working, along with the fact that revenues have begun to improve.
The county’s borrowing plans include $450 million for water and sewer and $300 million for PortMiami, which may be sold in the second quarter of this year.
Miami-Dade just implemented a new, $675 million general obligation bond draw-down program that operates similar to a commercial paper program but is less costly, does not require letters of credit, and eliminates bank credit risk.
Fitch Ratings and Standard & Poor’s rate the county’s GO bonds AA and AA-minus, respectively. Both have stable outlooks on the bonds.
