Northern VA Mayors and Chairs Protest Moody’s Action and the Federal Government’s Inaction, July 29, 2011

Statement from:

• Alexandria Mayor William D. Euille
• Arlington County Board Chairman Christopher Zimmerman
• Fairfax City Mayor Robert F. Lederer
• Fairfax County Board of Supervisors Chairman Sharon Bulova
• Herndon Mayor Stephen J. DeBenedittis
• Loudoun County Board of Supervisors Chairman Scott K. York
• Prince William Board of County Supervisors Chairman Corey A. Stewart
• Vienna Mayor M. Jane Seeman

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.

For the first time, our local governments are facing the possibility of losing our Aaa credit rating from Moody’s Investor Service because of the federal government’s failure to deal with the ongoing debt crisis. This has reached crisis level and is impacting everyone in Northern Virginia, and we say enough is enough!

Moody’s decision to place our bond ratings on review for possible downgrade was made because of federal inaction, and in no way reflects the continuing strength and good fiscal management of our local communities. Yet any rating downgrade will increase the cost of borrowing for us all, forcing governments across Northern Virginia to reevaluate and perhaps curtail, capital spending. The ripple effect of this situation on our local budgets could threaten basic services, just as we are slowly emerging from the multi-year, cyclical economic downturn.

Nothing has changed in terms of our local financial and debt management practices and our continued strong fiscal management and low overall debt burdens bring stability to the region. Northern Virginia is a major component of the region’s economic success story, according to a recent study by George Mason University's Center for Regional Analysis.

But the impact of this ongoing stalemate could be huge. As our transportation challenges grow and the facilities that house our firefighters, police and schoolchildren deteriorate, our plans to address these needs could be jeopardized. This crisis atmosphere raises serious concerns.

We fully understand the challenges involved in balancing revenue levels and funding essential services, since we accomplish this task every year in our localities. Our strong financial management practices have helped us manage through strong periods of growth as well as economic slowdowns while maintaining strong and stable financial profiles.

The time to act is now and we urge our leaders on Capitol Hill to set aside partisan differences, solve this ongoing crisis and come to a resolution of this problem for the good of us all.

Comment:  The fact of the matter is that a national debt downgrade will lead to higher interest rates for state and local borrowing in the months ahead.  This would raise the borrowing costs for Metrorail as well as the taxes and tolls that pay the Metrorail construction debt service.