Last Wednesday, Moody’s Investors Service Report issued a report downgrading Bowie County’s credit rating from A1 to A3. According to the report (available as a PDF download below), “The audited results for fiscal year 2012 significantly varied from our previously reported expectation of a $1 million surplus and instead reflected a $2.96 million deficit.”
The report says the deficit was caused primarily by “volatile jail operations” due to the loss of inmates and revenue from the privately-operated county jail, and to the large transfers from the General Fund necessary to fully pay off loans on capital equipment which had been refinanced annually.
Moody’s said they might further downgrade the county’s rating later this year, depending on whether the tax rollback passes, and if so, how the county handles the budget adjustment.
The report says Bowie County’s “sizeable and stable” tax base is a mitigating factor, especially the county’s diverse economic base.
Today, Judge Sterling Lacy issued the following press release:
Moody’s Investors Service announced on February 26, 2014 a downgrading of Bowie County’s underlying rating on General Obligation bonds to A3 from A1. There has been a great deal of finger pointing in the direction of my office with regards to the county’s current financial condition. I have been saying the same thing over and over, but now, for the record, let me state my position again.
The last time Bowie County had a rating of A3, was July 6, 2009 when the County’s underlying rating was raised from A3 to A2. However, at that time the fund balance was bloated by approximately $3 million due to illegal financing schemes of the former Judge, James Carlow. An elaborate Ponzi-type scheme of levying taxes for debt, moving most of that money to fund balance, and later spending it for the operations, led to two deceptions. First, it deceived Moody’s into believing the county was better off financially than it actually was. Second, it deceived the voters by misstating the effective tax rate and its rollback rate as reported in the annual Truth in Taxation public notice.
The citizens must let their voices be heard by demanding a full and thorough forensic audit of the county’s finances and practices.
Bill Henson, who is running for County Commissioner, Precinct 2, said:
It doesn’t reflect well on the county, but it really shouldn’t affect operations at all. The county has no business borrowing another dime until we get this whole mess straightened out.
Mike Carter is running for County Commissioner, Precinct 4, and is co-chairman of the Bowie County Committee for Lower Taxes, the group that was responsible for the rollback election mentioned in the report, said:
County government has grown too fast, and when the citizens were given an opportunity to do something about it, they told the county to stop raising taxes and trim the budget.
Jeff Akin, the other co-chairman of the of the Bowie County Committee for Lower Taxes, and candidate for County Judge, issued the following release:
Remember, the rollback effort was in response to the Bowie County Commissioners taxing the citizens beyond the legal limit, after the original tax paid off the illegally financed equipment. My opponent was in office when the equipment was illegally financed, but the act wasn’t discovered until the firm selling the Highway 82 Widening Project bonds conducted an investigation into the finances of the county. The actions of the former judge, and the current Commissioners, have placed the county in a very vulnerable financial position.
We are on the cusp of an important decision making time in the history of this county. I am praying that God will give each of the voters wisdom to cast a vote for honest ethical man who has a conscience to guide this county through these upcoming difficult times.