Fitch makes no rating distinction between the ULT bonds and the GOs and COs, both which are limited tax obligations, given the county's ample taxing margin.
The Rating Outlook is Stable.
The ULT bonds are secured by an unlimited ad valorem tax pledge levied against all taxable property within the county.
The GOs and COs are each secured by a limited ad valorem tax pledge on all taxable property within the county, not to exceed
KEY RATING DRIVERS
STRONG FINANCIAL PROFILE: The county's strong financial profile reflects solid reserves, positive operating margins, and prudent financial policies.
GROWING ECONOMY: Continued development in chemical manufacturing and petroleum processing is driving labor force growth and demand for housing, promoting residential development and boosting sales tax receipts. Unemployment is low and income metrics are generally above state and national averages.
CONCENTRATED TAX BASE: The tax base is concentrated in chemical manufacturing and petroleum processing. However volatility in these industries has been minimal, particularly with ongoing investment by the largest taxpayers in the area economy.
AVERAGE DEBT PROFILE: The county's overall debt ratios are high, driven by debt of underlying cities, school districts, and special districts. Carrying costs and amortization are average and future capital needs appear manageable, focusing primarily on road construction and maintenance as a result of the economic development.
SHIFT IN FUNDAMENTALS: The rating is sensitive to shifts in fundamental credit characteristics including the county's strong financial management practices that help mitigate concentration in the tax base. The Stable Outlook reflects Fitch's expectation that such shifts are unlikely.
GROWING ECONOMY CONCENTRATED IN PETROLEUM AND CHEMICAL MANUFACTURING
The county's economy centers on chemical manufacturing and petroleum processing with the presence of several other industries including fishing, tourism, government, and agriculture. The
Dow Chemical Co. is the largest employer and taxpayer in the county with 4,200 employees and 11.8% of taxable assessed valuation (TAV) in 2013. Dow Chemical's investment in the community continues to expand, along with other chemical manufacturers including
Overall, the largest taxpayers make up a high 24.3% of TAV in the county and reflect the dominant economic role of the prevailing industries. Fitch notes that the historical stability of these industries and the ongoing diversification of the regional economy somewhat offsets concerns regarding the current concentration.
Economic growth drives the county's need for both skilled and unskilled workers, thus lowering the
RISING TAXABLE ASSESSED VALUE
The county's TAV increased 3.3% and 6.7% in fiscals 2013 and 2014, respectively, and growth is expected to continue, augmented by previously abated properties being added to the tax rolls and a recent increase in the tax rate from
POSITIVE OPERATING RESULTS LEAD TO STRONG FUND BALANCE
The county is reliant primarily on property and sales taxes, making up approximately 65% and 15% of general fund revenues, respectively, and have been the leading drivers of revenue growth over the past decade. Robust economic activity and resultant tax revenue growth have also supported increases in reserve levels over the last five years. Fiscal 2013 ended with a strong 54.9% of spending in unrestricted fund balance, or
The fiscal 2014 budget includes balanced operations. Favorably, year-to-date results point to another year of positive operations, continuing a history of conservative budgeting and stronger-than-expected sales tax receipts. The positive expectation means that the county should have no problem maintaining compliance with its newly adopted fund balance policy of 25% of spending versus the previous 15%.
MIXED DEBT PROFILE
The county's overall debt levels are above average at
MANAGEABLE PENSION & OPEB LIABILITIES
The county fully funds its annual required contribution (ARC) to the statewide pension program and has an affordable other postemployment benefit liability (OPEB). Fitch considers the county's pension funded ratio adequate at 74.2% funded (using a 7% investment return) as of the
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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