Issue of the Month—County Cash Reserves and AAA Credit Rating

County Fiscal Services Director, Steve Duarte, recently reported the county has 53 days of cash reserves on hand with which to pay bills without having to buy “tax anticipation” notes to pay bills until such time as tax receipts come in to pay the bills. While the County has always had a cash reserve, it is alarming to note the number of days our county can operate has declined by 14% the past five years. This means we need to be careful how we budget for the next several years, and strive to maintain a healthy ‘unassigned’ cash balance. An additional reason to carry a healthy balance is it’s impact on the cost of money needed by the county to implement capital improvement projects. Since 1999 the County has been able to carry a triple-A financial rating—a distinction that only one other Michigan county carries. Standard & Poor—which recently downgraded the US credit rating—has said one of the main reasons they give us this rating is because of our healthy cash balance of nearly $68 million. This triple A rating enables the county—and many other local municipalities who use the county’s triple A rating to aid in their borrowing—over $1 million per year for capital projects over what it would be if we were only double A rated. The debate of how much we should continue to dip into the ‘’unassigned’ fund balance versus reducing level of services to live within current tax revenue becomes more relevant and difficult each year. I would be interested in hearing feedback from readers about how I should approach this issue.