Porter County officials got good news about the rating for its most recent bond issue, slated mostly for upgrades at the Porter County Jail, and kudos for a general fund surplus over the past nine years, though the same financial review also dinged the county for its “lack of more formal fiscal management practices.”
The $25 million general obligation bond for the jail received an AA/Stable rating by Standard & Poors Global Ratings as the county prepares to sell the bond on Dec. 5.
The service dates of the bond will be from Dec. 15, 2024, to Jan. 1, 2044. The $25 million is the threshold for the county to take out a bond without a referendum. Outgoing Porter County Commissioner Laura Blaney, D-South, said the formation eight years ago of the Porter County Foundation, which manages the proceeds of the sale of the hospital, is key to the rating.
“It takes a decade of hard work for this kind of stuff to get accomplished,” she said. “That’s a lot of people in county government who have been involved. This stuff gets built on a long line of good work.”
Porter County Board of Commissioners Vice President Barb Regnitz, R-Center, understands the bond rating process intimately as a retired financial planner who said she is used to being on the other side of the bond sale analyzing the creditworthiness of municipalities before suggesting her clients buy their bonds.
“You don’t have to get the bonds rated because you have to pay for that,” she explained, “but it’s harder to get a buyer” without doing so. “But because we’re going out to the market and we want to get the best possible rating we can,” the county opted for the rating.
Consultants have advised the county to expect an assumed interest rate between 3% and the low 4% range, though interest on the 10-year federal government bond has risen sharply since the election. Because municipal bonds are considered very safe they’re in high demand, Regnitz said. Contributing to Porter County’s high rating are nine consecutive years of general fund surpluses, the S&P report states, with 2023 bringing a higher than historical average.
S&P also gave AA/Stable ratings to the county’s outstanding $25 million bond that replaced the old jail bond and its Storm Water District Revenue Bonds. Regnitz said the combined actual impact of the two new $25 million bonds will be lower than that of the original jail bond.
On the negative, the report criticized the county’s “lack of more formalized fiscal management practices.” It’s something Regnitz has been working toward since taking office two years ago. “How would they know if we have a plan or not?” she wondered. “Where would that even be stated? That’s a really, really good question.”
She met with bond advisor Baker Tilly to prepare to answer all the questions the S&P analyst might have in early November. “I’m just really surprised that they would bring that up,” because a significant part of the bonding process is making capital improvements.
Councilman Jeremy Rivas, D-2nd, who was president of the council in the historical surplus year of 2023, said the surpluses have been “a testament to both parties regardless of who’s been in leadership. I think that one line (in the report) is a testament of strong fiscal management from the council.”
He also pointed out how a refusal to give the county’s employees the recently approved 3% raise for 2025 would have gone over once a report of the county enjoying nearly a decade of bringing in more than it was spending was made public. “Can you imagine if we didn’t give raises and people read this bond rating?” he asked.
He agreed that stronger fiscal planning should be in the works, suggesting a consultant be hired to help formulate a plan. “I think a number of us have been saying that for a while,” Rivas agreed. “What is the long-term plan?”
It’s a question that, like the county’s ability to show general fund surpluses, seems to have bipartisan support. Incoming Councilwoman Michelle Harris, a Republican who will serve at-large come Jan. 1, campaigned on the necessity of devising three-, five- and 10-year plans.
In August Regnitz asked Mike Jabo, director of the county’s Department of Development & Stormwater Management, to give a breakdown of plans for the county’s 800 miles of roads, one of its ever-pressing expenditures.
From 2025 through 2030 the county plans $63.6 million in capital road projects, $12.1 million of that coming from county coffers.
It’s a worthy goal that may get the attention of S&P the next time around. An AA rating still has room for upward movement. S&P also grants AA+ and AAA ratings to municipalities.
Shelley Jones is a freelance reporter for the Post-Tribune.
