LOS ANGELES -- Standard & Poor's Corp. last week lowered to A-plus from AA-minus its rating on $26.6 million of certificates of participation issued in 1991 by Marin County, Calif., for capital improvement projects.

The county's tardiness in managing expenditures in response to state funding cuts prompted the downgrade, Standard & Poor's said Friday in a release. While the country's financial flexibility has declined, its credit outlook is stable, the agency said.

Standard & Poor's also assigned an AA-minus rating to Marin County's planned issue of $53.17 million of taxable pension obligation bonds. A trial court judge recently validated the proposed negotiated issue. Pricing is expected to take place in about two months.

From 1991 to 1993, the county's slow response to state cutbacks resulted in operating deficits, the rating agency said. The county's 1990 unreserved general fund position was $21.9 million, or 17% of expenditures. In 1993, the amount fell to $2.3 million, or 1.4% of expenditures.

However, the unreserved balance is projected to increase to $12.1 million, or 6.9% of expenditures, by June 30, the end of the 1994 fiscal year. Contributing to the improvement are "the imposition of budgetary controls" and a one-time gain of $5 million for adopting the Teeter plan, an alternative method of property tax distribution that has been adopted this fiscal year by most of California's 58 counties, Standard & Poor's said.

"An improved rating would require stabilization of [the county's] financial position, including a track record of balanced operations and proactive financial management," Standard & Poor's said. But the county has "a lack of revenue-raising options."

The AA-minus rating assigned to the pension obligation bonds reflects Marin County's "vibrant local economic base," the rating agency said. The county has "above-average wealth and income levels" and its property tax base continues to grow.

The county also has a low debt burden at "a manageable 3.9% of expenditures," Standard & Poor's said. "Capital improvements have been made on a pay-as-you-go basis, and no additional debt is anticipated."

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