Arlington, Others Protest Review of Northern Virginia Area Bond Ratings

The continued impasse on Capitol Hill over raising the debt ceiling is spilling over into local governments.

Friday, several Northern Virginia mayors and chairs of county governments signed a joint statement in protest of Moody’s Investor Service’s intent to review the bond ratings of more than 100 local governments, including Arlington and Fairfax counties and the city of Alexandria.

The statement, signed by Arlington County Board Chairman Chris Zimmerman and others stated, in part:

“Northern Virginia does not have a debt problem, the federal government does. The continued inaction and partisan bickering over the very high amount of debt the federal government is carrying and how to deal with it is putting at risk the credit ratings of our Northern Virginia localities.”

'Sheer politics'

This month, Moody's -- one of three credit-rating agencies -- placed 15 AAA-rated Northern Virginia cities and counties on its Creditwatch list, which means those localities will be reviewed for a possible credit downgrade in 60 to 90 days.

Five states, including Virginia, are also on the list.

Primary factors for being placed on Creditwatch include the amount of federal employment in an area and federal contracting as a percentage of regional gross domestic product, said Michelle Cowan, Arlington County director of management and finance.

Arlington is in good shape for the short-term, she said. The county completed its last bond sale in June, and officials like Cowan don't believe the county will seek to issue bonds in at least the next nine months.

A loss of Moody's AAA rating could mean higher borrowing rates in the future, Cowan said.

"In the short-run, we are in very good shape. We are not expecting any near-term disruption to the county," she said.

"Certainly, I'm concerned about the long run. But we do long-term planning well. We're looking ahead to that. What's the longer-term impact to the county, how do we respond over three, five, seven, ten years? That's what the county's looking at, not so much the short-term."

Elected officials had much sharper tongues.

Alexandria Mayor Bill Euille told WTOP today, "It's time for the politicians—both on the left and the right—to take off their boxing gloves and stop acting childish….  Let's not kid ourselves, it's just sheer politics."

Gerry Hyland, Fairfax County’s Mount Vernon District supervisor, stated in an email to Patch: “It is unconscionable that Congress not do their jobs and find a way to compromise on the debt ceiling. Fairfax County and the Commonwealth are innocent by-standers of political sniping on the Hill."

If Fairfax County were to lose its AAA rating, then that government may be forced to delay certain projects, including improvements to schools and infrastructure, he stated.

Friday morning, President Barack Obama took to the airwaves again to encourage people to call, tweet or email their senators and representatives to encourage compromise.

'More than a news item'

Arlington County currently has a AAA from all three ratings agencies. But the loss of a "triple-triple-A" status could still hurt.

"For the localities, it comes down to the fact that the rating agencies say because of the lack of federal money that may not flow your way, then we think it will have an adverse effect on your borrowing ability," said Mark Flynn, director of legal services for the Virginia Municipal League.

"It’s more than just a news item for local governments. It can really hurt the plans that they have to do different things and to meet the needs of the citizens."

Patch editors Lauren Sausser and Sharon McLoone contributed to this report.