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Salt Lake May Have to Give up Decade-long AAA Credit Score

By Sally Maison
Published: Saturday, October 17th, 2009

Salt Lake County residents are facing another dilemma: whether they want more debts or higher taxes. Two of the three major rating agencies say the county is in danger of losing a much sought-after credit rating if it does not refurnish its budget. The county currently holds a triple-A bond rating and is considered one of the United States’ 23 best fiscally administered counties. Their present standing saved the county hundreds of thousands of dollars on interest rates when they borrowed money for government projects. But experts say it could lose their excellent credit reputation if they do not start changing policies.

Salt Lake May Have to Give up Decade-long AAA Credit Score Consumers all over America are struggling to improve their credit score, or at least keep it intact. But they are not alone as government units themselves are precariously holding their present debt standings. Experts predict that Salt Lake County could lose its triple-A bond rating if it does not implement changes in fiscal management soon. However, budget changes have serious consequences to the government and its residents.

Preserving its AAA bond implies raising tax rates higher or limiting Salt Lake County spending. But cutting on expenses would eliminate government programs, diminish services, and lay off several employees. Raising taxes could easily save the county its current rating but it has serious implications as well. Some council members believe that imposing higher taxes on residents will only give them additional burden in the current financial crisis.

Now they are considering another option: giving up that triple-A rating. Council members say they have to weigh if their current rating is saving them or costing them money. Salt Lake County has been holding an AAA for ten decades now with all three major assessing agencies confirming its wise fiscal practices: Fitch Ratings, Standard & Poor’s and Moody’s Investor Service. What makes the recognition more significant is that only 23 counties have that bond, which is less than 1 percent of USA’s 3,140 counties.

Rating agencies give prime rates to government units that can keep at least 10 percent of its budget in reserves. Last year, $28 million were in Salt Lake County’s reserve while its budget was at $226 million. But drawing out from reserves to stabilize local economy has substantially diminished funds. Now it is up to officials how they would appropriate local treasury next year.

Salt Lake County mayor hinted at cutting on government expenses but he says he does not favor laying off employees. His proposal includes limiting the number of days government services are available, such as shutting down some fitness centers during Sundays.

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