County governments "have navigated the difficult waters of the recession" while keeping debt levels modest, giving them more policy options in the next few years than other levels of government, Standard & Poor's Corp. said in a recent issue of Credit Week Municipal.

Standard & Poor's said countries during the recession have offset declining property and sales taxes with increased fees and reduced capital programs. "Now that the economy is showing signs of recovery, countries are in the comfortable position of meeting new budget priorities without the drag of new debt servicing costs," the rating agency said.

However, the agency warned that counties expanding their budgets "must proceed cautiously" because of the difficulties they face in raising taxes.

Moreover, Standard & Poor's said counties face structural changes that could pose obstacles during future economic cycles. For example, it said, changing county demographics will require a different mix of services, and increasingly complex municipal financial management will require more sophisticated control systems.

Despite the hurdles facing counties, the agency said county officials are well positioned to meet the challenge of continuing to promote efficiencies in public service.

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