KBRA Upgrades Erie County, NY General Obligation Bonds to AA; Outlook Stable
10 Jul 2023 | New York
KBRA upgrades the long-term rating on the County of Erie, NY's outstanding General Obligation Bonds rated by KBRA to AA. Concurrently, KBRA assigns the long-term rating of AA to the County of Erie, NY's General Obligation Public Improvement Serial Bonds, Series 2023A and General Obligation Sewer District Serial Bonds, Series 2023B. The Outlook is Stable.
The upgrade recognizes the County’s strong governance structure, diversifying economy, resilient revenue performance, and manageable fixed cost burden. The strong financial management framework is evidenced by a long-term trend of balanced budgets and continued growth in General Fund unassigned balance.
Key Credit Considerations
The rating was upgraded because of the following key credit considerations:
Credit Positives
- Consistently stable General Fund unassigned fund balance above the Charter requirement of 5% of the prior year’s General Fund expenditures.
- Diversifying resource base that has shown resiliency during periods of economic stress.
- Strong fiscal management controls and sound pension funding metrics contribute to expenditure flexibility.
Credit Challenges
- Heavy reliance on economically sensitive sales tax revenues to fund operations.
- The statutory limitation in the rate of increase in the property tax rate has the potential to adversely impact expenditure flexibility.
- The timing and amount of intergovernmental fund transfers to ECMCC are outside of the County’s control.
Rating Sensitivities
For Upgrade
- Improved internal liquidity and increased revenue-raising flexibility.
- Continued maintenance of available reserves above required levels.
For Downgrade
- Evidence of deterioration in the County’s liquidity position.
- Inability to achieve structural budgetary balance due to a decline in economically sensitive revenues or lack of flexibility in reducing operating expenditures.
- Difficulty in navigating recessionary pressures given reliance on sales tax revenues and State statutory limitations on property tax growth.
To access rating and relevant documents, click here.