Politics & Government

Other Local Governments Could Join Manassas Park in Having Credit Rating Lowered

Moody's Investor Service put more than 100 Northern Virginia cities, towns and counties on notice that it would be reviewing most AAA credit ratings for possible downgrade in light of the debt ceiling debate in Washington.

Other Northern Virginia local governments may soon join Manassas Park in having their credit ratings reduced.  

Moody’s Investor Service put more than 100 Northern Virginia cities, towns and counties on notice that it would be reviewing most AAA credit ratings for possible downgrade in light of the debt ceiling debate in Washington.

While local leaders from Prince William County, Fairfax County, Herndon and other areas released a joint statement this week expressing their discontent with Moody’s decision,  Manassas Park city manager Jim Zumwalt said on Friday the city credit rating is unlikely to be reviewed, because it has just been reviewed, Zumwalt said.

Find out what's happening in Manassas Parkwith free, real-time updates from Patch.

 The city’s last review resulted in a five-notch drop in its credit rating this month from AA+ to BBB/negative.  The negative portion of the credit rating means that Standard and Poor's (S&P) analysts expect to downgrade the rating in the future if Manassas Park’s financial situation doesn’t improve, according to the report on the S&P website.

 “Since our bond rating has just been reviewed, I doubt it will be re-reviewed,” Zumwalt said in an email Friday.   “The ratings that are most likely to be changed as a result of a federal default are those with very high AAA ratings.  If the federal rating is dropped below AAA, the rating agencies may also lower the rating of state and local government with AAA ratings.”  

Find out what's happening in Manassas Parkwith free, real-time updates from Patch.

It's unlikely the city will be immediately impacted by the federal government’s debt issues, Zumwalt said. 

If the federal government should default, Zumwalt surmises the impact would be, “limited and indirect,” because the city isn’t expecting any significant payments from the federal government for its schools or social services programs. 

Manassas Park, like other Northern Virginia areas, could be impacted if federal employees are laid off, or if government contracts are cancelled, Zumwalt said. 

Mark Flynn, director of Legal Services of the Virginia Municipal League said the debate in Congress is more than just a news item for local governments. 

"It can really hurt the plans that they have to do different things and to meet the needs of the citizens," Flynn said Friday. "There are various programs in every locality that are dependent on federal dollars, either direct or passed through the state."

"In Virginia's economy, we have defense facilities across the state. We have a lot of federal facilities and we just get a lot of federal money."


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