Allegheny's finances to get better with slots taxes

Mike Wereschagin

Jul. 10, 2009 (McClatchy-Tribune Regional News delivered by Newstex) -- An investment ratings group says Allegheny County's finances, which have relied on one-time cash infusions, are poised to get better once the Rivers Casino starts paying taxes.

Moody's Investor's Services gave the county an A3 bond rating, one notch higher than Pittsburgh, the county announced Thursday.

"A3 is a solid, investment-grade rating," said Aaron Freedman, assistant vice president of Moody's.

The rating, Moody's seventh-highest out of 21 possible ratings, allows the county to borrow money at lower interest rates. The county plans to sell about $107 million in bonds next week -- $80 million to pay for capital projects during the next two years, and $27 million to refinance debt. The refinancing will save about $1.2 million, said county Budget Director Amy Griser.

"Moody's positive rating is further proof of the success that we have had since 2004 in improving efficiency, cutting costs and reducing debt, which have been done without raising property taxes," said County Executive Dan Onorato.

The rating agency noted the county's structural deficit -- the difference between its revenue and expenditures -- could be as high as $11.7 million this year. The county is making up the difference by spending $14.2 million in its reserve account, according to Moody's.

Next year, the county is expected to get as much as $15 million from a 2 percent tax on the North Shore casino's gross revenue, which Moody's said should put the budget back in balance. The agency said the county's drink and car rental taxes, which sparked protests when enacted in 2007, were necessary to get the budget close to balancing.

Along with the casino, Moody's noted a series of attractions that are drawing people and their money to the county. Among them: the David L. Lawrence Convention Center, with environmentally friendly construction that helped attract the Group of 20 summit; inexpensive hotels; and the world champion Steelers and Penguins.

"The positive outlook reflects our belief that the county's financial position has stabilized, at a minimum, and will likely continue to strengthen over the medium-term," according to Moody's ratings report.

The rating likely will increase if the county balances its budget, or continues expanding its tax base through economic development successes, according to the report. If tax collections fall significantly below what's expected, or if courts force the county to spend millions to reassess properties, the rating could fall, the report said.

Newstex ID: KRTB-0288-36368352