Sims hails new AAA bond ratings and an end of deficits in positive 2006 budget

Oct. 17, 2005

Sims hails new AAA bond ratings and an end of deficits in positive 2006 budget

>> Budget speech from Executive Ron Sims

King County Executive Ron Sims today unveiled a 2006 budget that reflects an exceptional turnaround in county finances. It includes healthy reserves, no major cuts and reflects the benefit of strong policies that control costs to align with revenues. The Executive called on the council to join him in continuing the conservative fiscal policies that helped the county control costs, overcome four years of deficits and earn new triple-A bond ratings.

"We have turned King County government around by working with our employees and our cities to control costs," said Executive Sims. "We must remain vigilant; we must continue to control our costs in order to have enduring success.

"Cost control, stable revenues and prudent management has put us on the verge of solving the structural deficit we faced these last few years," Sims said. "I call on the council to leave the reserves in place and make into law the fiscal policies that have put us in such strong financial standing."

In his budget speech to the Metropolitan King County Council, Sims announced that two large national rating agencies last week gave King County triple-A bond ratings, the highest possible rating for a local government. Standard and Poors cited ‘exceptional financial management' during challenging financial times' when it raised its rating for King County 's general obligation bonds. FitchRatings cited King County 's excellent management during the last four years when the county cut $137 million in deficits and developed policies to align expenses with revenues.

A third bond rating firm, Moody's had previously rated King County triple-A stating in December 2004 "King County has maintained its strong financial position despite significant challenges."

Controlling expenditures was a critical first step. The second was controlling costs, especially health care costs.

"So far this year we have cut the rate of growth in employee benefits to a remarkable 2.4 percent from an average 11 percent annual rate," said Sims. "Instead of cutting benefits or asking employees to share in the cost of healthcare premiums as so many other employers have done, we asked employees to become more involved in their health care and to make healthier choices. By comparison the State of Washington 's employee health benefit costs are growing at an annual rate of 10.6 percent and the City of Seattle is growing at 11 percent.

"We cannot squander the revenues of a recovering economy," said Sims. "We must stay the course, build our reserves and be prepared for a future that could hold devastating emergencies such as pandemic flu," Sims said. Sims last week announced a $6 million budget request to prepare for the possibility of a global pandemic that could kill as many as 3,000 King County residents and devastate the economy.

"This budget reflects the values and priorities of our citizens," said Executive Sims who proposes:

$464 million for transit service including 18,000 new service hours and a new park and ride in Issaquah;
$45 million for roads capital projects including $1.2 million to complete the last five of 115 bridge seismic retrofits;
12 Sheriff deputies for the transit security unit;
$4.7 million to fill the gap left by changes in Medicaid reimbursement to Public Health, plus $1 million to meet new health needs;
$39 million in programs designed to prevent homelessness;
more than $20 million in regional trails and open space including $9 million for trails and $11.6 million for open space preservation;
$26 million to build the pipeline backbone for a regional reclaimed water system; and
$850,000 for Klahanie annexation to Issaquah and carry over reserves for possible annexations in North Highline , West Hill, East Renton and Fairwood.

In addition to the Annexation Initiative, the 2006 budget includes continuation of several programs designed to control costs including the employee Health Initiative program and the integrated regional jail system in partnership with the county's cities to reduce jail costs and reduce the impact on police agencies of transporting prisoners.

The $3.35 billion 2006 budget includes a $599 million General Fund (CX) and a $772 million Capital Improvement Fund. The financial plan for the General Fund includes $79 million in reserves in excess of the county policy of maintaining a 6 percent reserve. Criminal Justice is 71 percent of the General Fund, the same rate as in 2005. General Fund local services to the urban unincorporated areas cost $42.5 million, but generate only $22.6 million in local General Fund revenues, a nearly $20 million shortfall.

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