MARIETTA — Cobb commissioners unanimously approved an annual stopgap for the county in June to the tune of $64 million, learning immediately prior to their vote that the county’s financial outlook was expected to remain positive.
The $64 million in bonds approved Tuesday are known as tax anticipation notes, or TANs. The borrowing is performed by the county between fiscal years, a practice dating back to the early 1980s, as Cobb collects most of its revenues in the form of property taxes near the end of its fiscal year, which closes Sept. 30. The county must therefore take out TANs earlier in the fiscal year to pay for its operations, according to Bill Volckmann, the county’s finance director.
When the county brings in property taxes, it pays back the TANs. Then it uses the remainder of the revenues to continue operations through the middle of the next year before another TANs issuance to continue the cycle.
“As part of the TANs process, we always have to get our ratings from the rating agencies in New York,” Volckmann said during Tuesday’s meeting. “The early indication is that we’ll have AAA ratings.”
The country’s three bond rating agencies — Fitch Ratings, Moody’s Investor Services and S&P Global — have given the county their top ratings since 1997. Having the top marks among all three agencies is commonly referred to as having a Triple-AAA bond rating. The county’s bond ratings serve a similar purpose as credit ratings do for individuals.
“The indications that we will receive AAA ratings from the rating agencies are positive,” Volckmann said, adding that Cobb officials were expected to publish on Tuesday a press release announcing the bond ratings. But the county had not done so as of Wednesday evening, citing the wait for official announcements on the ratings from the agencies.
In addition to maintaining the Triple-AAA bond rating, Volckmann said the county expects to improve its outlook among the ratings agencies after Moody’s last year revised its outlook on the county as “negative.”
“That outlook has been changed to ‘stable,’ which is where it needs to be. That year was the first year that we received that negative outlook, and because of the actions that took place last summer, we were able to improve that,” Volckmann said, referring to the county’s property tax increase.
Chairman Mike Boyce’s proposed property tax increase of 1.7 mills was approved by a 3-2 vote last July, hiking the general fund property tax hike from 6.76 mills to 8.46 mills.
“(The agencies) are usually, I won’t say, quick to give it, but they’re not very quick to restore it,” Volckmann added, “so the fact that we were able to restore it in one year is a tremendous accomplishment.”