CHICAGO - While some Cook County, Ill., commissioners are worried that a political scandal over the sudden departure of the county's chief financial officer could affect its bond rating, credit analysts say that's unlikely and are more concerned about the potential impact of a proposed cutback in the unpopular sales tax hike pushed through last year.
Commissioners last week called a special meeting to review the county's finances in light of the resignation of CFO Donna Dunnings on April 17 at the request of board President Todd Stroger.
Details surrounding Dunnings' resignation remain unclear but center on suggestions of an inappropriate relationship with a former county patronage employee who was a convicted felon and had been arrested a number of times.
Stroger originally hired Tony Cole after meeting him at a Chicago steakhouse where Cole was a busboy. During Cole's six-month stint at the county, Dunnings twice bailed him out of jail for violating an order of protection against an ex-girlfriend. Despite that, he was twice promoted, the second time to a $61,000-a-year job in the highway department. Stroger fired Cole earlier this month after learning of his convictions.
Stroger, who is Dunnings' cousin, has offered different versions of why he asked Dunnings to resign. At first he said he expected Cole to make "explosive allegations" against her and wanted to spare her from being dragged through the mud by commissioners and local media. More recently, he has said that Dunnings had been planning to leave this year anyway and her departure had nothing to do with Cole.
At the meeting late last week, commissioners voiced concerns over the scandal's impact on the county's mid-double-A level rating. But rating analysts said the move was unlikely to affect the county's overall fiscal position.
"We don't overreact to a CFO leaving because there's staff to carry on," said Standard & Poor's analyst John Kenward. He said the county's financial adviser called the rating agency to let analysts know of Dunnings' departure. "They wanted us to know that the interim staff was in place and that their financial machinery is in order, and we have confidence that it is."
Moody's Investors Service analyst Ted Damutz agreed. "Our ratings are not tied to any one individual," he said. "We look at the longer-term policies in place, and certainly we look for a strong management team, but it's just that - a team. From time to time, situations like this take place, unfortunately, but it rarely directly impacts the credit rating."
The scandal comes as the board prepares at its May 5 meeting to consider three proposals to scale back or completely eliminate last year's 1% sales tax increase. The hike, which made Chicago's sales tax the highest in the nation, is expected to bring in hundreds of millions of dollars in new revenue.
"Already there's the slowdown in the economy as it relates to the sales tax, and now there's discussion of paring back the sales tax - that's something that's really helped buoy [the county] during the last two reviews," Damutz said. "If they actually [pare it down], that is something that could more directly impact the rating."
After last week's meeting, interim CFO Joseph Fratto - formerly Stroger's chief of staff - told reporters that Dunnings' fiscal management had been strong and that a recent review had found no problems. "The review by the controller covered all of the expenses charged to her budget and nothing has come up," he said.