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25 April 2013

Democrat Robb Pitts Admits Fulton County's Failure to Cut Spending Led to Lower Credit Rating

Fitch Ratings, a global credit rating agency, downgraded the general obligation (GO) bonds of Fulton County from "AA+" to "AA" last week.

In the news release announcing the credit downgrade, Fitch Ratings stated, "The downgrade of the county's GOs and other long-term ratings is based on erosion of financial flexibility. This is evident in a sharp decline in general fund reserves, and limited expenditure flexibility given spending cuts to date.

"The Negative Outlook reflects the potential for a rating downgrade of at least one-notch on all long-term ratings if the county fails to adopt a fiscal 2014 budget absent reliance on fund balance or other non-recurring measures," the Fitch news release read.

Fulton County Commissioner Robb Pitts, a Democrat, said he was not surprised by the credit downgrade. According to the Fulton County Democrat, the practice of using reserves to balance the budget is not looked upon favorably by rating agencies, and was a contributing factor behind the lower credit rating.

"Annually, I have warned of the need to cut spending, so it is no surprise that we have gotten to this point," Commissioner Pitts said in a statement.

Pitts contends that tapping into the reserves is a direct result of Fulton County not sufficiently cutting their spending.

Commissioner Pitts went on to say he hopes the downgrade in Fulton County's credit rating will force others to heed the sound advice of county chief financial officer Patrick O’Connor, who urged county commissioners not to rely on reserves to balance the budget and to cut spending.