The Rating Outlook is Stable.
The GO bonds are secured by the county's irrevocable pledge of its full faith, credit, resources and ad valorem taxing power without limit as to rate or amount.
KEY RATING DRIVERS
SOLID FINANCIAL POSITION: Reserve levels in the county's general fund are strong and the county has posted only one operating deficit in the general fund in the past six fiscal periods. The budget is largely funded by the levy of property taxes, which are subject to a moderately restrictive statutory tax cap.
STRONG MILITARY, TOURISM PRESENCE: The local economy has remained relatively stable and is anchored by a strong and growing military presence. Tourism is also a large economic driver for the county, driven by
FAVORABLE DEBT PROFILE: Debt levels are moderate, amortization is rapid, and long-term obligations related to pension and other post-employment benefit (OPEB) costs are manageable.
CONTINUED FINANCIAL STABILITY: General fund revenue has been relatively flat over the past several years and the county appears to have decreasing expenditure flexibility to balance the fiscal 2015 budget. Fitch believes that this could potentially strain the county's presently strong financial resources over the intermediate term if unchanged.
The county is located just north of the
STRONG RESERVE POSITION
The county's general fund position has continued to strengthen with fiscal 2013 operations adding
STAGNANT REVENUE CONSTRAINS BUDGET
Property taxes account for 75% of general fund operating revenue in fiscal 2013. The tax base is very affluent, as reflected in a market value per capita of roughly
General fund revenues have been fairly stagnant the last several years. The county enacted furloughs, implemented a hiring freeze, and reduced pay-go capital spending in response. The county has cut expenditures by a cumulative 5.3% from fiscal 2010 to fiscal 2013; over the same time period, general fund revenue posted some minor negative variance but remained relatively flat.
The fiscal 2015 budget appears to be somewhat tighter for the county, driven largely by a
STRONG ECONOMY WITH TOURISM AND MILITARY CONCENTRATION
The county consists of numerous islands, including the popular resort community of
The significant military presence, including
A large decline in assessed value (AV) from fiscal 2013 to fiscal 2014 was the result of the county's five-year revaluation cycle. The last revaluation in 2009 did not incorporate much of the negative recession-driven housing market effects. The county's millage rate was increased to provide for a revenue neutral tax levy for fiscal 2014 levy. The county anticipates modest near-term tax base growth which Fitch views as a reasonable expectation given a slowly improving housing market.
FAVORABLE DEBT PROFILE
Fitch expects the county's overall debt burden to remain moderate given modest needs and rapid amortization. Overall debt is low at 2.1% of market value but higher on a per capita basis at
Carrying costs for debt service (12.4% of governmental expenditures in fiscal 2013) and retirement benefits (3.2% and 0.3% for pension contributions and other post-employment benefits (OPEB), respectively) are affordable and partly reflect the fairly aggressive repayment of outstanding debt (67% retired in 10 years). The county provides pension benefits through state-administered plans and funds 100% of its required contribution. Fitch-adjusted state retirement system funding levels were low at 61.4% for general employees and 67.4% for police 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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