Miami-Dade County’s low rainy-day fund prompted Moody’s to maintain a “negative” outlook on the government’s finances this week, a reminder of the stakes as Mayor Carlos Gimenez rolls out a plan to boost cash reserves in the coming years.
The for-profit ratings agency maintained the county’s credit score two notches below the top grade, and it also declined to lift the negative outlook for Miami-Dade. That means a downgrade in the actual rating (currently Aa2, which is the third best behind Aa1 and Aaa) is more likely than an upgrade for future credit reports.
Moody’s cited the county’s $43 million contingency fund, which it said was “low for a government the size of Miami-Dade.” The emergency reserve amounts to less than 3 percent of the $1.59 billion bucket of property taxes and other levies that funds general government operations. But the report also was optimistic about plans by the Gimenez administration to boost reserves to $78 million by 2019, a restoration that would top the rainy-day’s last peak of $73 million, reached in 2009.
Recent revisions to Miami-Dade’s five-year financial forecast have eliminated projected deficits between 2016 and 2018, part of a more than $200 million positive swing through 2019. The encouraging forecasts are a key part of Gimenez’s message of Miami-Dade having “turned the corner” from economic and budget woes as he heads into a 2016 reelection campaign.
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The Moody’s report notes Miami-Dade cut $400 million in payroll costs from the budget during the last three years and eliminated about 2,200 positions. The savings were needed, in part, to compensate for a 2011 tax cut that Gimenez championed during his successful run for mayor that year.
Scores from rating agencies impact how much governments pay to borrow money on the bond market. Miami-Dade enjoys more favorable outlooks from Moody’s competitors Fitch and S&P, which put the county’s financial prospects in the “stable” rather than “negative” category.