The Rating Outlook is Stable.
The series 2012 bonds are secured by the county's full faith and credit and taxing power, subject to a 2011 state statute limiting property tax increases to the lesser of 2% or an inflation factor (tax cap law). This limit can be overridden by a 60% vote of the county legislature.
The county has pledged its full faith and credit and unlimited taxing power for debt service on outstanding general obligation (GO) bonds issued prior to 2011. No exemption is made under the tax cap law for debt service on outstanding GO debt; however, the constitutionality of this provision has not been tested.
KEY RATING DRIVERS
FAVORABLE ECONOMIC PROFILE: The county benefits from its proximity to the
STABLE FINANCIAL OPERATIONS: Management is financially conservative, proactively reducing expenditures over the last several years. Fitch expects the county's financial profile to remain sound with adequate reserve levels despite budgeted use of fund balance.
REDUCTION IN CONTINGENT LIABILITIES: Fitch views favorably the sale of the county-owned nursing home and the implementation of a flow-control law for the resource recovery agency, both of which will reduce general fund subsidies and increase financial flexibility.
FAVORABLE LONG-TERM LIABILITY POSITION: The county's overall debt burden is low and is expected to decline due to limited capital plans and above-average debt amortization. Pension and other post-employment benefits (OPEB) are manageable.
CHANGES IN FINANCIAL OPERATIONS: Fitch expects management to continue its prudent financial practices including the maintenance of adequate reserve levels. A trend in surplus operations in combination with stable to increasing reserves could result in a Positive Outlook or rating upgrade.
DIVERSE ECONOMIC BASE
The county economy is fairly diverse with a strong and growing tourism sector. The county is home to
The county's unemployment rate historically has been below state and U.S. rates but increased slightly in 2012 and 2013. In
STABLE FINANCIAL OPERATIONS
Sales tax is the largest source of general fund revenue, at 35% in 2012. In 2012, general fund sales tax revenues increased by 2.6% over 2011 and were 3.4% above budget. Property taxes provide the second largest general fund revenue source at 23%. The property tax base is diverse with the top 10 taxpayers making up 13.9% of taxable value. The largest payer is the city of
Prudent financial practices including proactive management of expenses and conservative budgeting have produced stable financial operations and reserve levels. Management absorbed higher fixed costs in 2012 through operational efficiencies via the elimination of 23 positions and the restructuring of
With the exception of a small operating deficit after transfers in 2009 due to the recession, the county has achieved general fund operating surpluses after transfers in every audited year since 2006. Positive results continued in 2012, driven primarily by strong sales tax growth and lower than budgeted expenses. As in the past, the county conservatively budgeted for use of fund balance but none was required to balance operations. At year-end
PROJECTED USE OF FUND BALANCE IN 2013
The county's 2013 budget includes a
CONTINGENT LIABILITIES REDUCED IN 2013
Fitch views positively the
On another positive note, starting in 2013 the county will no longer pay an annual net service fee (approximately
2014 BUDGET ASSUMPTIONS INCLUDE USE OF FUND BALANCE
MANAGEABLE DEBT AND PENSION COSTS
The county's credit profile benefits from low overall debt, modest future borrowing and a well-funded state pension plan. Overall debt is modest at
The county participates in the
Pension payments have increased substantially over the last few years and are budgeted for
The county currently funds its OPEB liability on a pay-go basis and will continue to do so as there is no authority under present state law to establish a trust account or reserve fund for this liability. As of
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
Source: Fitch Ratings
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