Wall Street Gives Highest Rating to County Notes

Confirming the county’s current fiscal health despite a spat over how it will fund its massive health department, Wall Street agencies Tuesday gave the county’s tax and revenue anticipation notes their highest rating for short-term debt.

The $600 million in notes, to be sold later this week, will provide the county with enough cash to fund its $15-billion operation until the first installment of property taxes arrives in December.

The county is two weeks away from losing a key federal waiver and could find itself facing deficits of $250 million if the item is not renewed. Supervisors have been warning of a health care “catastrophe” and massive cuts. But rating agencies were untroubled by that possibility, noting that the county last year had a $568-million fund balance and has other solid reserves to protect against shortfalls.

Analysts’ reaction was in contrast to the last time the county found itself facing a health crisis. In 1995, Wall Street was so jittery about the county’s prospects in the depths of the recession that the county had to self-insure its short-term notes. The waiver, granted that fall, rescued the county from possible bankruptcy.

“Los Angeles County has made significant progress toward financial stability,” Fitch ICBA, a rating agency, said in a press release. But it noted, as have county budget staff members, that the supervisors have yet to solve a persistent structural deficit in their health department.