BOND RATING REVIEW PLANNED; S&P RE-EVALUATION COULD AFFECT VENTURA'S FUTURE CREDIT.

Byline: Krystn Shrieve Staff Writer

Troubled by Ventura County's current financial crisis and its shrinking budget surplus, a Wall Street company plans this week to review the county's bond rating - something that could affect its future borrowing power and its reputation.

David Hitchcock, financial director of Standard & Poor's in New York, said a review is justified by a $5 million shortfall in the county's current fiscal budget.

Of equal concern, he said, is a steady decline in the budget surplus - money left over at the end of a fiscal year. The surplus stood at $21 million in 1996 but is projected to be just $9 million this year - and the total right now is closer to $6 million.

This, Hitchcock said, is a sign that the county cannot leave within its means.

``With the recession of the early '90s, counties were stressed and didn't have much in the way of discretionary measures. But in recent years, counties have been doing well, and it's an anomaly that Ventura County is still struggling,'' Hitchcock said.

``Ventura County each year has projected a surplus,'' he said, ``and still had a deficit.''

But the county is working to overcome its financial problems, with supervisors vowing last week to slash spending to erase the $5 million shortfall. Hitchcock said this likely will be enough to ease concerns on Wall Street.

``Honestly, a $5 million gap should be able to be closed quickly in a county that size,'' Hitchcock said. ``Our concern is that if it's difficult for (supervisors) to make cuts of such a small magnitude, it raises questions about their willingness and flexibility to make other cuts should they become needed.''

With bond ratings ranging from AAA - the highest - to D - default - Ventura County's previous issues have earned rankings in the A-range - higher, Hitchcock said, than most other California counties.

Auditor-Controller Thomas Mahon said a downturn in the county's bond rating would not affect the county's current bonds - technically called certificates of participation - but could increase the cost and interest rates of those sold in the future.

``As far as the county is concerned, the direct financial impact of this is nothing,'' Mahon said.

However, Supervisor Frank Schillo said even if there is no immediate financial impact, a drop in the rating could forever affect the public's perception of the county's fiscal strength.

``When you float those bonds, citizens in Ventura County buy them,'' Schillo said. ``If there should be a downturn of our rating, people will ask why they should take a risk on us. And once you get something in the people's mind, it stays there.

``Even if the rating went up and we waited to float bonds, people would still remember,'' he said. ``That's the danger.''

Schillo said he hopes to convince supervisors to put available fund balances in the county's reserves in the future rather than the current practice of rolling the money over into the following year's budget.

``Let's put the fund balance into the reserves and then start from scratch each year,'' Schillo said.