When the Covid-19 public health crisis brought everything to a halt in 2020, local government leaders panicked. Then-Governor. Andrew Cuomo withheld county grant funding and used words like “bankruptcy” to describe the potential threat to state finances.
Erie County Executive Mark Poloncarz froze hiring and cut positions as the county faced a potential loss of millions in reserves, which could have hurt the county’s credit rating.
But two years later, the budget situation could not be more different. Supported by a flood of federal stimulus money, strong sales tax growth, cost controls in 2020 and a growing property tax base, Erie County’s finances are doing better than ever.
This fiscal picture is reflected in the county’s improved credit rating by Standard and Poor’s. The better the credit rating, the lower the borrowing costs for major construction projects, such as a new Buffalo Bills stadium.
People also read…
Poloncarz said his research indicates the county’s improved rating from AA- to AA is the highest the county has achieved in decades.
“There’s nothing like where we’ve been as a county since 1975,” he said, citing the last time the county’s rating was at least that high. “I think that says a lot about where we are as a government and how we’ve been able to manage our finances.”
The S&P credit rating of AA is the third highest credit rating attainable and reflects an “extremely strong” ability for the county to meet its financial commitments.
Although some Democratic lawmakers were initially reluctant to earmark the money, the push by Republican-sponsored lawmakers to pour more money into the stadium project proved compelling.
The rating upgrade is particularly significant as the county plans to borrow $150 million next year to fund its share of building a new Bills Stadium.
“That’s the big deal,” County Comptroller Kevin Hardwick said. “In football terms, it’s preseason. Next year is the Super Bowl.”
The county must pay $250 million in stadium construction costs, including $100 million from county reserves. Standard and Poor’s noted that even with $100 million earmarked for the stadium this year, the county still has plenty of money saved.
While the county will likely be forced to deal with rising interest rates on the new stadium’s debt next year, the improved credit rating will help reduce borrowing costs the county would otherwise have to face. faced if he had maintained his AA- credit rating.
The agency’s rating report cited many positive factors that led to the decision to upgrade the county’s bond rating, which is expected to remain unchanged next year. For example, the report refers to a “diverse and growing local economy”, strong financial management policies, sales tax growth and stable state aid.
The initial public funding for the construction of the stadium is $850 million, or 61% of the cost.
A record year-end budget surplus from 2021 and responsible county spending of U.S. federal bailout money for one-time costs were also positive factors in the ratings upgrade.
Poloncarz and Hardwick met via Zoom with S&P analysts in late July, with Poloncarz highlighting strong economic growth and Hardwick highlighting the careful steps the county has taken to emerge financially sound from the Covid-19 pandemic, the comptroller said.
S&P’s credit rating increase is the first increase the agency has given the county since 2014. The last time the county received a credit rating upgrade from a rating agency, c t was in 2019, when Moody’s raised the county’s credit rating before the pandemic.
Standard and Poor’s higher rating will allow the county to borrow money more cheaply and encourage more investors interested in buying the county’s debt, officials said.
Poloncarz compared S&P’s county credit rating to the days following the county’s red and green budget crisis in 2005, when the county’s credit rating fell to a level above junk bond status. He also pointed out that the county’s rating is now higher than it was under the careful leadership of former county manager Dennis Gorski.
“They’ve never had a rating as high as ours right now,” Poloncarz said.