17 Aug ESSEX COUNTY EXECUTIVE DIVINCENZO ANNOUNCES ESSEX COUNTY EARNS AAA RATING FROM MOODY’S INVESTORS SERVICE Essex County Receives First-Ever AAA Rating Latest Upgrade Caps Financial Reversal with County’s Bond Rating Improving from Junk Bonds in 2002 to Highest Rating in 2018
Essex County, NJ – Essex County Executive Joseph N. DiVincenzo, Jr. announced that Moody’s Investors Service has awarded Essex County a Aaa Stable bond rating. According to published reports by Moody’s, this is the first time Essex County has received a Aaa rating. It also signals the success of DiVincenzo’s ongoing fiscal initiatives that have improved the County’s bond status from just above the junk bond level to the highest rating given by Moody’s.
“This is great news for Essex County and validates all the hard work we have done for the past 16 years. I want to thank Moody’s for giving my administration the opportunity to prove ourselves and for listening to our story of transformation in Essex,” the Executive said. “We achieved the Aaa rating because of everyone working together – my Department and Division Directors, the Board of Freeholders, our Constitutional Officers, our county agencies and our 3,500 employees. I appreciate everyone’s support and that we all shared the same goal,” he noted.
“The higher bond rating displays the trust and confidence that Wall Street has in Essex County’s finances and will help us get better interest rates and attract more prospective investors when we issue bonds,” DiVincenzo pointed out. “For our residents, having a Aaa rating makes living in Essex County more attractive and will enhance property values,” he said.
“When I was elected in 2002, Essex County was going through its most difficult financial time. We inherited a $64 million budget deficit and Moody’s was on the verge of downgrading our bond rating to junk bond status, which would have put us in the same category as Orange County, California,” DiVincenzo said about the past. “Even before I was sworn into office, my team met with Moody’s, laid out our plan for financial recovery and asked them to give us a chance to address our budget problems,” he added.
Moody’s six-page report states the award was warranted because of DiVincenzo’s conservative budget practices and his initiatives to build a fund balance. “Over the past several years, management has materially improved the county’s finances which are now very healthy,” the report states. “Essex County’s strong management has been a major driver in its financial improvement. Management has implemented conservative, proactive budgeting, and has consciously chosen to rebuild reserves to healthier levels than had previously been the case,” it notes.
Moody’s re-examined Essex County’s finances in anticipation of the County issuing general obligation bonds in September to pay for various capital improvements throughout the County, the expansion and renovation of Essex County West Caldwell School of Technology and for various capital improvements at Essex County College. Essex also will be selling bond anticipation notes to finance capital improvements in the Essex County Schools of Technology District and to support various bridge, culvert, drainage, road, parks and building projects.
DiVincenzo began strengthening the fund balance in 2003. However, about $51 million from the fund balance was used as revenue in the 2008 and 2009 budgets during the Great Recession to make up for revenue that was lost. During those years, because of the fund balance, the County did not have to furlough or lay off any employees. The fund balance is anticipated to be $118 million at the end of this year, which helps with cash flow and has enabled the County to not take out any temporary bond issues in recent years.
In addition, the County Executive has been able to hold the line on tax increases. In this year’s budget, the tax increase was held to just 0.75 percent. Over the last eight years, the average property tax increase for the county portion is just 1.65 percent, well below the 2 percent cap law in New Jersey.