CECIL COUNTY — The County Government has announced that Cecil County’s bond rating has increased from Aa2 to Aa1, allowing the county to pay lower interest rates on expenditures and shrinking the potential for future tax increase. This serves as a milestone in Cecil County charter government history, according to county officials.
The bond rating increase follows the county’s fourth quarter financial summary which showed an increase of roughly $19.4 million in the county’s fund balance- moving last year’s fund balance total from $108 million to $127.4 million.
When the county was evaluated by Moody’s — an industry-leading credit rating agency — fund balance growth; economic health and development; quality of management and governance structure of administration and the ability to show conservative budgeting practices were all factors taken into account.
“The factors are right out of the playbook of the experts on how good municipal governments operate and we do it everyday,” said Director of Administration Steve Overbay.
County officials said that they were able to demonstrate strong examples of each factor which contributed to Cecil County being one of only 31 counties with a population below 105,000 nationwide to earn a bond rating increase.
Cecil County’s fund balance is what county officials say has set the foundation for all factors that contributed to the county’s increased bond rating as its growth is a direct reflection of the Hornberger administration’s conservative fiscal approach.
“We take a conservative approach with budgeting and financing as a whole by not spending aggressively, but by still making sure we are not pulling back on services we provide to citizens,” said County Executive Danielle Hornberger.
Hornberger explained that conservative budgeting principles and providing services is a “balancing act” that her administration is trying to do in a “thoughtful and meticulous manner.”
The majority of the growth seen in the county’s fund balance can be seen in property tax and income tax revenues, along with the county spending $2.5 million below budget last year.
“Our budgeting approach starts with a fiscally responsible budget where our goal is to under promise and over perform as it relates to finances,” said Overbay.
Officials emphasized that although the fund balance has grown by over $19 million, about $47 million is either restricted per charter code or already assigned to future expenses through what they call “proactive budgeting.”
“We have bills the same way our residents have bills so we set aside money — which we then consider assigned funds — to be able to pay those bills,” said Hornberger.
By charter, the county has to have 10 percent of its general fund set aside as an “emergency reserve for contingencies.”
County officials confirmed that they have increased the amount of money in their emergency reserve and that the new fund balance of $127.5 million will continue to serve as the county’s reserve fund so they can “weather the storm during economic downturn” — the plan they have maintained during each budget.
“This is allowing Cecil County to weather any economic downturns that could raise taxes at the state level,” said Hornberger. “When something like that happens, we know we are going to have to pick up the slack because we do not know what could happen to our state funding.”
With officials attributing fund balance growth and an increased bond rating to conservative fiscal practices, they say they look forward to “saving taxpayers millions of dollars” since the bond rating increase essentially serves as good credit for a person trying to buy a car at a lower interest rate.
“In layman’s terms, we have a good credit score that allows us low interest rates that ultimately put us in a better position to not need to increase taxes for large expenditures,” said Hornberger.
The increased bond rating is what officials consider another tool in their financial kit to allow them to continue exercising creative and conservative budgeting.
“This increased bond rating puts us among the top counties because it shows our strength in conservative finances, government and management,” said Finance Director Shon McCollum. “We want to grow those practices.”
