The Rating Outlook is Stable.
The bonds are limited obligations of the authority, secured by and payable from the
KEY RATING DRIVERS
COUNTY GUARANTEE: The rating is based on the unconditional guarantee of
STRONG SOCIOECONOMIC INDICATORS: Wealth and income levels are well above average. A large and diverse tax base and proximity to
ANTICIPATED FINANCIAL STABILIZATION: After five straight years of substantial fund balance declines greatly reduced the county's financial flexibility, the county projects a small surplus for 2013 and further improvement in financial results in 2014 to help restore fund balance levels and eliminate the need for short-term cash flow borrowing.
PROPERTY SALES: The recent sale of two properties, including a nursing home, will bolster reserves and eliminate financially poorly performing, non-core assets.
LOW CARRYING COSTS: Pension funded ratios are strong and the county's liability related to other post-employment benefits is nominal. Overall carrying costs are very low.
FUND BALANCE CHANGES: Failure to improve fund balance levels as expected would restrict the county's financial flexibility, leading to downward rating pressure. Conversely, achievement of projected fund balance growth and maintenance of those higher levels would restore financial flexibility, potentially leading to an upgrade in the medium term.
The county is located 30 miles west of
The county's diverse tax base benefits from the presence of 17 hospitals, higher education institutions, service providers, and several large pharmaceutical companies including Merck, GlaxoSmithKline and Wyeth. Job growth and development continues to occur around the
The county's property tax base stayed flat throughout the nationwide economic downturn with tax rates remaining well below neighboring counties. Taxpayer concentration is minimal. Wealth levels remain strong as reflected in per capita income levels at 148% of both the state and national levels. The county's unemployment rate of 5.1% in
SHARP DECLINE IN FUND BALANCE LEADS TO CASH FLOW BORROWING
The county's general fund balance declined significantly in recent years, mostly due to management's decision to hold tax rates constant and a decline in state funding. Property taxes and state funding are the county's primary revenue sources. As a result, historically high general fund balance levels of over 20% of spending have been reduced each year since 2007.
The 2012 budget was adopted without the use of fund balance due to a 17% increase in the property tax rate. However, the budget did not include a contribution to its well-funded pension plan. Fitch takes funding of pension actuarial required contributions (ARCs) into account when evaluating structural budget balance. Even without a pension payment, 2012 ended with a
The 2013 budget was balanced with no increase in tax rates. The county again had to use cash flow borrowing early in the year. While again not funding the ARC, the county made its first contribution to the pension system since 2007. Preliminary results show a
The county expects to have further growth in fund balance in 2014 as a result of the continued improvement in operations and the sale of two properties, including a nursing home. Both sales closed earlier this year and allowed the county to defease
The budget includes another payment to the pension fund, though it again will likely be below the ARC, but only modestly. As a result, the county expects to finish the year with fund balance above its 10% target level. Because the closing of the property sales was slightly delayed, the county had to do another smaller short-term cash flow borrowing, but does not anticipate doing so again in the future.
MANAGEABLE DEBT LEVELS
Debt levels are estimated to be average on an overall basis, with debt per capita at approximately
The county's pension plan funding is strong at a Fitch-adjusted rate of 87.5% 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' (
Tax-Supported Rating Criteria
U.S. Local Government Tax-Supported Rating Criteria
Source: Fitch Ratings
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