County’s bond rating holds firm despite budget woes

Citing low debt levels and high cash reserves, Standard & Poor’s has affirmed Whitman County’s A+ bond rating, The rating ranks in the middle of Standard & Poor’s system. By contrast, the city of Spokane was given a Standard & Poor’s AA rating, fifth highest on the rating services scale.

“Well, we’re better than Greece,” said County Commissioner Michael Largent.

The rating is Standard & Poor’s opinion on the credit-worthiness of Whitman County’s financial obligations. Ratings are used by investors as a gauge of credit quality.

Some officials worried the county’s budget crunch, which resulted in a tapping of reserve funds for the current budge year, could lower its bond rating.

That would be important if the county were to issue bonds, as it has planned to do to pay for $9 million of infrastructure construction at the proposed stateline stripmall site in the Pullman-Moscow Corridor. Boise-based Hawkins Companies plans to eventually develop the mall at the site.

“This maintains our stability,” said Commissioner Greg Partch. “This shows investors that Whitman County is a solid investment.”

A dip in the bond rating would likely increase interest rates on those bonds, said Sharron Cunningham, assistant finance director. That would throw off the county’s plans to guarantee the bonds with sales tax revenue eventually derived from the shopping center.

“What would the difference be on a $9 million bond for Hawkins?” asked Largent. “It could be huge.”

Commissioner Pat O’Neill questioned the importance of the rating.

“This statement’s great,” said O’Neill. “Unfortunately it’s probably not worth the paper it’s written on.”

O’Neill said credit rating agencies were at the heart of the mortgage crisis that brought on the collapse of global financial markets.

O’Neill said many of those ratings were inaccurate, and the value of investments based on them took a severe hit when the housing market tanked.

Agencies, he pointed out, were paid by banks to rate their products to encourage investment.

Whitman County paid Standard & Poor’s to prepare the rating.

Largent, though, saw the rating as valuable.

“This is absolutely key when you go to float a bond,” he said. “That steady rating gives investors confidence in our financial solvency.”

Strengthening the rating is the county’s stable economy, centered around WSU and agriculture, its cash reserves and its low debt burden. The county currently only owes on general obligation bonds it issued in 2002 to finance improvements to the courthouse campus.

Weakening the county’s rating is the fact that its annual financial statements have not been independently audited since 2003.