Growls

Bloomberg News reported this afternoon the debt ceiling drama taking place at both ends of Pennsylvania Avenue in Washington, D.C. has spilled over into Northern Virginia and some other parts of the country. According to Bloomberg:

“Moody’s Investors Service placed 177 top-rated municipal-bond issuers with a combined $69 billion of debt outstanding on review for possible downgrades as it evaluates its Aaa rating of the U.S. government.

“The change affects 162 local governments in 31 states, 14 housing-finance programs and the University of Washington in Seattle, the company said today in a statement. All have high exposure to federal spending changes and market volatility, Moody’s said. The largest numbers of local issuers on review are in Virginia, with 15, and Massachusetts, with 14, Moody’s said.”

This is how Moody’s explains their move in the Bloomberg report:

“The ratings of these local governments, particularly those with a high economic dependence on federal activity, would be vulnerable to a downgrade of the U.S. government,” Matt Jones, a Moody’s senior vice president whose team covers local governments, said in the statement. The company also cited “sensitivity to deteriorating macroeconomic conditions and vulnerability to disruptions in the financial markets.”

To show that Arlington County’s enlightened leadership is still in place, the PR apparatchiks rushed out a press release announcing “Arlington financial fundamentals remain strong.” The press release went on to say:

“Arlington County’s economy and its overall financial picture remain strong, County Board Chairman Christopher Zimmerman said today, in response to Moody’s Investors Service decision to place 15 Aaa-rated Virginia localities – including all of Northern Virginia and Arlington County – on its “Creditwatch list” due to the impasse over federal debt limit. Zimmerman called on the federal government to protect states and localities from financial harm by immediately resolving its impasse over raising the debt limit.

“Moody’s action followed the ratings agency’s previous placement of the U.S. government’s debt rating – and that of the Commonwealth of Virginia -- on review for possible downgrade due to well-publicized issues relating to the federal debt limit. A total of 162 Aaa-rated communities in 31 states were put on Creditwatch today.”

The announcement by Moody’s provides a lesson for Arlington County taxpayers, however. The county’s panjandrums want voters to think it’s triple A bond rating is entirely the result of the enlighted manner in which the Arlington County Board manages and administers the county. Now we learn the county’s triple A bond rating is due to it’s geographical location. Unfortunately, it could be a very expensive lesson for Arlington taxpayers.

Not to worry, though, the press release says there are “no plans to sell bonds in the next  3-9 months.” But if a downgrade does occur, it could make some projects appreciably more expensive. For example, projects  just getting underway (construction of the new Wakefield High School) or on the drawing board (the trolley or the pools building at Long Bridge/North Tract).

UPDATE (7/30/11): An item by Scott McCaffrey posted a news item this morning in the Arlington Sun Gazette, that says the debt ceiling debate at both ends of Pennsylvania Avenue in the District "has Arlington, Fairfax officials hot under (the) collar." He then adds:

"The top elected officials in Arlington and Fairfax counties are expressing displeasure that congressional bickering over the federal debt ceiling is filtering down and could affect each county’s bond rating.

“To put it simply: Fairfax County does not have a debt problem, the federal government does,” Fairfax Board of Supervisors Chairman Sharon Bulova (D) harrumphed after her county government was notified it was among 162 communities in 31 states to be put on a “watch list” by Moody’s Investor Services."