New Jersey’s Essex County has climbed to near the top of the bond rating charts 15 years after sitting in triple-B territory.
Moody’s Investors Service boosted Essex County one notch to Aa1 on Friday marking an eighth credit upgrade for the large suburban county since 2005. The county, which is also rated AA-plus by Fitch Ratings, had a $64 million budget deficit with no fund balance in 2003 on the heels of a downgrade by Moody’s to Baa2.
Essex County Executive Joseph DiVincenzo Jr. said Monday that four years into office he helped build Essex’s fund balance to $35 million in 2007, which helped the county weather the 2008 recession. Reserves dropped to $9.8 million in 2009, but were since rebuilt to a projected $76.8 million in the 2017 Essex County budget.
“Restoring our financial health has been the key ingredient to our transformation in Essex and has helped us weather the storm of the Great Recession, handle rising health care and pension costs and avoid budget shortfalls,” DiVincenzo said in a statement Monday. “Over the last 15 years, we have aggressively monitored our revenues and expenditures; continually asked our directors, constitutional officers and agencies to reduce spending; initiated long-term planning to control our debt; and followed conservative budgeting practices to regain our financial strength.”
DiVincenzo added that another key to improving Essex’s fiscal conditions was refinancing debt in 2007 during a low interest rate environment. The county has also set a policy to not exceed a total of $20 million in annual capital spending.
“Essex County has a history of strong management and conservative budgeting,” Moody’s analyst Douglas Goldmacher said in Friday’s report. “The county’s financial position should strengthen further in the medium term as management continues to budget conservatively.”
Moody’s also assigned an Aa1 rating to the county’s planned $92.4 million general obligation bond sale on Aug. 29. Proceeds from the transaction will fund capital improvement projects throughout the county including at the Essex County Donald Payne School and Essex County College.
In addition to the GO sale, the Essex County Improvement Authority is slated to issue $43.3 million in revenue refunding bonds, which also received an Aa1 Moody’s rating. County officials expect to save $5.3 million from the refinancing.
Essex County encompasses 22 municipalities including New Jersey’s largest city, Newark. The county had a population of 784,000 in the 2010 U.S. census.