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DuPage County no longer has a pristine credit rating

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Illinois

* Fitch Ratings lowered DuPage County’s rating to AA+, down from AAA, the first time in anyone’s memory that this has happened…

In a statement Sept. 2, released as the holiday weekend was beginning, Fitch said roughly $150 million in DuPage debt was a victim of revisions in its criteria for state and local governments.

“The downgrade reflects Fitch’s concern (about) the county’s limited revenue flexibility and slow revenue growth prospects,” the New York firm wrote. “(Fitch’s) revised criteria placed increased focus on Fitch’s expectations for the natural pace of revenue growth without revenue-raising measures and the ability of an entity to independently increase revenue.”

That concern appears to be in part due to extreme reluctance by the county in recent years to raise property taxes. It also reflects that the county now has little undeveloped land, with its population apparently plateaued at a bit under 1 million.

In general, Fitch said it expects revenue from existing taxes to grow “slightly below historical trends” and generally only in line with national inflation. “While sales tax revenue has growth between 4 percent and 5 percent annually over the past several years, it has slowed to only 1 percent growth in fiscal 2016, leading the county to change its growth assumptions going forward to only 2 percent growth.”

In a statement back, DuPage Chief Financial Officer Paul Rafac emphasized that the county still is AAA in the view of Standard & Poor’s and Moody’s ratings.

posted by Rich Miller
Tuesday, Sep 6, 16 @ 1:57 pm

Comments

Then why did DuPage just lower the sales tax?

Comment by burbanite Tuesday, Sep 6, 16 @ 2:00 pm
I’m sure that, somehow, it’s Madigan’s fault.

Comment by anon Tuesday, Sep 6, 16 @ 2:06 pm
Burbanite: The DuPage County Water Commission sales tax expired per the statute that created it and, for some reason, the county did not see the need to extend it. I was surprised by this decision as well. Sometimes a temporary tax increase really is a temporary tax increase. (See also, 2011 Income Tax increase).

Comment by SAP Tuesday, Sep 6, 16 @ 2:07 pm
“The downgrade reflects Fitch’s concern (about) the county’s limited revenue flexibility and slow revenue growth prospects”

But I thought the good and hard-working people of DuPage County were supposed to avoid the consequences of Bruce’s budget brinkmanship…

– MrJM

Comment by @MisterJayEm Tuesday, Sep 6, 16 @ 2:18 pm
Apparently even a Republican run county can’t deal with their finances.

Comment by Republican County Tuesday, Sep 6, 16 @ 3:13 pm
Still waiting on the economic boom, and increase in tax revenues, guaranteed by lowering taxes. /s

Comment by walker Tuesday, Sep 6, 16 @ 3:28 pm
Political grandstanding about not raising taxes is common at the county. It reminds me of Rauner asking and getting the non-renewal of the 5% state income tax. The water commission tax was controversial from the start because only some towns and residents would have access to the water, but everyone was taxed county-wide. The tax extension supposedly was to fund extending their pipeline to form a loop back to the main pumping station, and be fed from both ends of the loop. That is a good engineering practice, if they get a break in the line, the section with the break can be valved off for repair without shutting off water to everybody down the line. The pipeline loop was canceled, and someday they will end up having to shut the water off to hundreds of thousands of people to do repairs.

Comment by DuPage Tuesday, Sep 6, 16 @ 3:48 pm
Re: water commission reduction in sales tax - The cost of water and maintenance went from a countywide sales tax to a user fee. It’s a fairer way to charge because only water users will pay for the water - not a countywide sales tax where some residents aren’t part of the DuPage water commission.

Re: the bond rating ding - Two out of three rating agencies still have them at AAA. Less than 5% or so of all counties in the US have a AAA by two out of 3 rating agencies.

Also, DuPage County has kept the property taxes flat for the past 8 years (for that portion of the tax bill that the county board is responsible for).

Comment by Anon Tuesday, Sep 6, 16 @ 4:21 pm
DuPage has virtually no land left to build sizable single family home developments left. And they will never let large amounts of multi family be built, so very slow growth it must be.

Comment by Anonymous Tuesday, Sep 6, 16 @ 4:32 pm
As growth slows the mix of taxes and fees needs to change. It may take a while to develop the new mix and levels.

Not worried yet.

Comment by Last Bull Moose Tuesday, Sep 6, 16 @ 4:37 pm
If a culture of refusing tax increases takes hold, ratings agencies will take notice. I think this is probably the leading edge of the wedge for DuPage.

Comment by Angry Chicagoan Tuesday, Sep 6, 16 @ 5:09 pm
Anybody out there know what percentage of a typical DuPage County property tax bill actually is the county tax?

Comment by blue dog dem Tuesday, Sep 6, 16 @ 5:30 pm
I believe that between the county boar & forest preserve (two different entities) the total combined bite out of the property tax bill is about 7%. IIRC the county’s share is about 4% and the forest preserve is about 3%. The other 93% goes towards school districts, municipalities, and various other taxing bodies.

Comment by LKLIII Wednesday, Sep 7, 16 @ 11:19 am