Seven years ago, when Wayne County Executive Warren C. Evans took office, the county was in rough financial waters. From a credit rating of Baa1, the upgrade to A3 comes from one of the world’s top-three credit-rating agencies. The upgrade comes as a result of financial improvements through changes in policy and operations put in place by the Evans Administration.
The report, released by Moody’s Investor Services, gives a detailed account of the agency’s decision to boost the county’s credit rating. The company uses a grading scale from Aaa to C with 21 total notches. Formally ranked in the medium grade category, Wayne County is now upper-middle grade. With the rise in rating, Wayne County can now barter for better contract terms for funding.
“When I first came to office, we had to make tough decisions to set the county on a sound financial course,” said Evans. “Now, we are seeing the fruits of those decisions. Wayne County is a good investment because of the decisions we made. Those decisions are saving taxpayers money in the form of lower financing costs the county incurs during its normal operations.”
The bump in credit rating shows the county’s ability to meet its long-term debt obligations. Helping to appear as a worthy investment to institutional bond investors, the county’s new rating means it will cost less to finance long-term infrastructure and investment projects.
The credit rating bump is particularly monumental as it happened during a time where financial security was up in the air. The COVID-19 pandemic forced the county to adjust its revenue forecast due to the statewide economic shutdown. Despite the shutdown, the county has managed to continue to grow and stay committed to its financial program.
“We have finally stopped robbing Peter to pay Paul,” said Evans. “Wayne County is living within its means, and it is making investments in projects and programs that are growing our tax base, attracting new companies and good-paying jobs and improving our quality of life.”
According to the report, Moody’s also determines the county’s economy will strengthen based on its strong financial position and federal money received as a part of the pandemic to help mitigate economic hardships caused by the pandemic.
When Executive Evans began his first term in January of 2015, the county was under a $132 million fund deficit with an overall pension liability of $1.5 billion. The state of Michigan planned to declare a financial emergency for the county. In just 14 months, the Administration eliminated the $132 million general fund deficit, balanced the budget, shored up retiree pensions while saving $348 million and successfully exited a consent agreement with the state of Michigan.
There is still room for the county to increase its credit grade rating. Just six rankings separate the county from having a perfect credit grade, or Aaa as determined by Moody’s. This ranking system has been in use since 1909 when it was introduced to the U.S. bond market by John Moody. To determine a grade, the accessor uses publicly available data, information gathered by the World Bank, financial journals, debt issuers and other agencies such as central banks, ministries, or regulators. A committee is composed of managing directors and the lead analysts.
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