During what host Michael Aron called a “spirited” debate by the two candidates for Bergen County Executive this weekend, incumbent Democrat Dennis McNerney defended the county’s debt level by touting its Aaa bond rating.
Republican challenger Kathe Donovan dismissed the rating, Moody’s Investor Services highest, as simply due to the county’s ability to raise taxes.
“A triple A bond rating just means you raise a lot of money in taxes, it doesn’t mean good government,” Donovan said.
McNerney moved on before correcting Donovan and potentially scoring a point for himself in the debate that at times devolved into a chorus of accusations from each candidate.
All general obligation bonds are backed by the issuers taxing ability and its pledge to raise taxes in the event that default is likely. And though all are backed by the tax pledge, few receive a Aaa rating. In New Jersey, only seven counties, including Bergen, have been given Moody’s highest rating. In fact, the state of New Jersey’s recent bond rating from Moody’s was Aa2, with a negative outlook, a full two spots below the county’s rating.
Moody’s issued the Bergen rating in July on a $17.9 million issue backed by the embattled Bergen County Improvement Authority. The proceeds of the bonds will go to refund outstanding Bergen Regional Medical Center Project Bonds. Though the bonds are issued through the Bergen County Improvement Authority, they are guaranteed by the county and receive the same rating.
According to Moody’s:
“The highest-grade Aaa rating reflects the county’s substantial and diverse tax base with high wealth levels and proximity to New York City, sound financial position, and low debt burden with an above-average amortization rate. The stable outlook reflects our expectation that the county’s size and wealth will continue to exceed state and national norms, that its financial position will continue to be well-managed, maintaining Current Fund balances at adequate levels, and that the debt burden will remain manageable.”