Overview
Every day, King County works to become the best-run government in the United States – a government that earns public trust through effective stewardship of resources, improved performance and processes, and results that have a positive impact on the lives of all King County residents.
King County’s commitment to becoming the best-run government includes prioritizing strong financial management, such as maintaining healthy reserves and high bond ratings.
How much are we doing?
As part of our financial management practices, King County currently maintains a “rainy day reserve” of $20 -$26 million in its General Fund. In addition to providing resources to cover unexpected expenses, a strong General Fund reserve also serves as a key metric for the credit rating agencies that set the County’s bond rating. Other factors that rating agencies consider include long term liabilities, an assessment of management approaches, the cash balance, the health of the local economy, and the County’s revenue framework.
The level of reserve has been well maintained and well managed for the last three biennial budget cycles, or last six years. In the last biennium, the County made a decision to increase its balance to $26 million to signal a strong financial position to ensure high bond ratings. The rainy day reserve fund represents 16-17% of the total combined fund balance in the General and Rainy Day Reserve Funds across the three biennia.
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How well are we doing?
Bond ratings play an important role in determining the interest rates for King County's debt. These ratings are similar to an individual's credit score; they serve as an external and independent evaluation of the County’s finances and allow us to pay a lower interest rate on bonds. The County’s debt program includes funding major infrastructure projects on enterprise programs including wastewater, solid waste, and transit.
Our General Fund reserve, low debt levels, and other strong financial management practices mean that King County has been able to maintain the Limited Tax General Obligation (LTGO) ratings of "prime" or "high grade."
These ratings provide outside investors with an understanding of the County’s ability to pay off long-term debt obligations. These ratings from the major rating agencies are:
- AAA from Standard & Poor's
- AAA from Fitch
- Aaa from Moody’s
As a comparison, our ratings are better than our neighboring counties to the north and south. The graphic below shows the County’s strong bond rating compared to Snohomish and Pierce counties.
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Is anyone better off?
Because we manage our money so well, King County has saved roughly $40.7 million in avoided interest payments since 2009.* In addition to the ability to issue more debt to pay for capital projects, these savings are passed off to our customers in a variety of ways:
- Minimizing wastewater and solid waste rate increases to customers.
- Supporting infrastructure upgrades in solid waste and wastewater.
- Replacing critical information technology systems to support internal services such as records and licensing, procurement, and financial management.
- Avoiding general fund related reductions to critical functions such as criminal justice and health and human services.
*Note: This estimate of debt service savings was calculated by looking at General Obligation bond and note issues since 2009 and estimating the differential if the County had a bond rating one notch lower. The related differential was applied over the life of each specific issue to determine how much higher the total interest costs would have been.
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Additional resources
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Because of the county's response to COVID-19, this data story will not be completed until the 2021 revisions.
