Several Northern Virginia localities and one water authority had their Aaa ratings reaffirmed by Moody’s Investor Service Thursday, but was assigned “negative outlooks” pending individual reviews due to the local governments’ links with the federal economy.
Alexandria, Arlington County, Fairfax County, Fairfax County Water Authority, Fairfax City, Loudoun County, Prince William County and the towns of Herndon and Vienna were among the 161 localities that received negative outlooks from the rating agency.
The action mirrors the Tuesday announcement that the federal government’s Aaa rating was reaffirmed, but assigned a negative outlook, a Moody’s spokesman said.
“A negative outlook for these jurisdictions means that there...is a risk of a downgrade over the next year or two,” said Naomi Richman, managing director at Moody’s. “Specifically, if the U.S. government’s rating is downgraded, then these ratings could be downgraded as a result of that.”
Over the coming weeks, each locality will have the opportunity to defend their fiscal management with the rating agency to have the negative outlook removed and possibly replaced with a stable outlook.
“Therefore, removing the negative outlook would mean that this particular rating could remain at Aaa even if the U.S. government were no longer Aaa,” Richman said.
Bruce Johnson, acting Alexandria city manager, said staff members are preparing to defend the city’s finances.
“While the federal government is a major economic presence in the regional economy, we feel that the city’s location inside the Beltway, the diversity of our economy in general, and the particular types of federal agencies located here, including the fee-supported Patent and Trademark Office, will help us through the coming federal budget cutbacks,” Johnson said.
Steve Solomon, finance director for Prince William, said the staff has come up with 17 points as to why Moody’s should not downgrade the county’s rating.
“We will make the case why we should have never been on this list in the first place,” Solomon said. “We just got AAA ratings with positive outlooks in the past few months from all three credit agencies and the only thing that has changed since is the issue with the federal government.”
Solomon said that the county gets 5 to 6 percent of its revenue from the federal government and that he is “hopeful” that Prince William will be removed from the list.
Arlington, like the other jurisdictions, is waiting on details about federal budgets cuts that were made as part of the debt ceiling deal that may affect the county’s programs, said Michelle Cowan, Arlington’s director of management and finance.
Other Virginia jurisdictions that were assigned the negative outlook were Ablemarle County, Chesterfield County, Hanover County, Henrico County, Charlottesville and Virginia Beach.
Staff writer Jennifer Buske contributed to this report.