CHICAGO - Fitch Ratings has revised its outlook to negative from stable on Cook County, Ill.'s AA general obligation credit as the county prepares to go to market with $150 million of notes for the first time under new chief financial officer Donna Dunning.
At the same time, Fitch affirmed the rating assigned to the county's $3 billion of outstanding GOs. Cook, which includes Chicago, is expected to enter the market July 8 with $150 million of sales tax anticipation notes.
The note sale comes a week after a 1% sales tax increase kicked in on July 1. Chicago's sales tax is now 10.25% - the highest in any big city in the U.S. The county's portion of that tax is now 1.75%, up from 0.75%. The increase is expected to add about $400 million annually to Cook's coffers.
In revising its outlook to negative, Fitch noted the "increasingly high-tax environment for retail sales in a down economy," as well as other fiscal and political pressures, including the need for structural reform across the county's massive health care system, which accounts for one third of its $3 billion annual budget.
"The long-term sustainability of fiscal decisions, and the charge for structural reform and revenue enhancement, will be key future challenges," Fitch analyst Melanie Shaker wrote in a report on the county released this week.
Fitch also assigned its top F1-plus short-term rating to the notes, a reflection of the sales tax increase as well as the "steady collection history of pledged sources."
