--Implied general obligation (GO) bonds at 'AA-'.
The Rating Outlook is Stable.
The bonds are secured by the implied pledge of the county's full faith and credit.
KEY RATING DRIVERS
SOLID FINANCIAL PROFILE: Conservative budgeting and a willingness to raise revenues have resulted in consistently sound reserve and liquidity levels, even with occasional fund balance drawdowns.
LIMITED MANUFACTURING-BASED ECONOMY: The employment base relies heavily on manufacturing, with contributions from the government sector. The county's position as a small regional hub provides supplementary employment in the retail and medical sectors.
MIXED SOCIO-ECONOMIC FACTORS: Unemployment has historically been below the national averages yet above that of the state. Wealth metrics are well-below average.
LOW DEBT BURDEN: The county's debt profile includes low overall debt levels and carrying costs. Amortization is average and pension funding is satisfactory.
FINANCIAL PROFILE DETERIORATION: Fitch expects the county to retain its high reserve position to counterbalance concerns over the limited economy and below-average wealth levels, credit factors that Fitch believes limit the rating to its current level.
Located in southwest
ECONOMY LED BY MANUFACTURING
The county's inclusion in the 'Tri-Cities' region has permitted it to expand employment opportunities beyond its own relatively narrow manufacturing base and the government sector. Within the county, six of the leading employers are manufacturers, including the second largest employer,
The county has leveraged its 5% sales tax to provide retail destinations that are attractive to residents of northern
Assessed valuation has held relatively steady in the county, with only modest declines since the recession. Preliminary results indicate a mild rise in real property assessed value as a result of the recent revaluation. The county's population growth has been positive since the 2000 census, in contrast to the trends in certain adjacent counties, attesting to the county's residential attractiveness.
AMPLE RESERVE LEVELS
Conservative budgetary management has enabled the county to maintain healthy reserves and liquidity. Most years, the county appropriates fund balance, often determining the amount to appropriate based upon unspent school funds from a prior year. Generally, the county does not utilize the full appropriation.
Fund balance that is ultimately utilized often is directed back to the schools, although recently reserves were utilized for general operating expenses. The current rating incorporates Fitch's expectation that going forward the county will preserve its financial margins, despite the occasional draw down of fund balance.
The county concluded fiscal 2012 with a surplus equal to 3.6% of spending and ended with general fund reserves at a very healthy 45.3% of spending. Unaudited fiscal 2013 data indicate that revenues were uncharacteristically below budget, although expenditure variances were positive to the budget. Preliminarily, the county anticipates concluding the year with a deficit equal to 3.4% of spending, although reserves are expected to remain ample at 40.9% of spending.
An increase to the personal property tax rate in fiscal 2014 is expected to generate an additional
Preliminarily, the county anticipates a relatively stable financial profile in fiscal 2015. The school system might be required to increase its pension annual required contribution by
FAVORABLE DEBT POSITION
Overall debt levels are low at
Long-term obligations do not pressure the credit. All full-time salaried county employees participate in the state's defined benefit pension plan. The county contributed its full required contribution. The state plan reports the funded ratio for individual plan participants, and using a Fitch adjusted 7% investment rate of return the county's portion was adequately funded at approximately 70.4%.
For other post-employment benefits (OPEB), county employees receive an implicit subsidy plus a minimal annual credit. Total county carrying costs, inclusive of debt service, pension and OPEB costs, equaled a low 6.3% of spending in fiscal 2012.
Additional information is available at 'www.fitchratings.com'.
In addition to the sources of information identified in Fitch's Tax-Supported Rating Criteria, this action was additionally informed by information from Creditscope,
--'Tax-Supported Rating Criteria' (
--'U.S. Local Government Tax-Supported Rating Criteria' (
U.S. Local Government Tax-Supported Rating Criteria
Tax-Supported Rating Criteria
Source: Fitch Ratings
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