Bond proceeds are being used to finance certain public buildings, facilities and grounds in the county. The bonds will sell via competitive sale
In addition, Fitch affirms the following ratings:
The Rating Outlook is Stable.
The bonds are GO bonds to which the full faith and credit and unlimited taxing power of the county are pledged.
KEY RATING DRIVERS
LOWER BUT REASONABLE RESERVE LEVELS: The county has maintained a reduced but healthy fund balance as reserves were utilized over the past several years for capital and operating needs.
AMPLE LEGAL TAX RATE FLEXIBILITY: The county's taxing capacity under the income tax cap as well as the unlimited property tax rate provides additional financial flexibility.
NARROW YET STABLE AND WEALTHY ECONOMY: The economy benefits from the presence of a naval research facility as well as a location proximate to the employment centers of
HEALTHY DEBT PROFILE: A low debt burden, affordable capital needs, sound debt affordability policies and a rapid amortization rate underpin the county's healthy debt profile.
OTHER LONG-TERM LIABILITIES ARE EASILY MANAGED: Costs for retiree obligations are low and do not pressure operations.
REDUCTION IN RESERVES: The rating is sensitive to a shift in fundamental credit characteristics, and in particular the stability of financial operations in the near term. Reserve levels remain adequate considering the county's other strengths; however, Fitch is moderately concerned about the recent history of operating deficits and use of reserves for operations, a practice that is not viewed as sustainable at the 'AAA' rating level.
SOUND RESERVE LEVELS
Financial operations are strong and reserve levels are expected to remain healthy despite some drawdown based on year-to-date fiscal 2014 performance. The county has gradually drawn reserves that were accumulated during the economic boom of the last decade, largely to fund capital and other one-time needs.
In fiscal 2013, the general fund incurred a modest operating surplus of
MODEST USE OF FUND BALANCE EXPECTED FOR FISCAL 2014
The adopted fiscal 2014 budget was a 3.8% increase (
TAX RATE FLEXIBILITY
The adopted fiscal 2015 budget is 4.6% higher than the 2014 adopted budget. The budget keeps the property tax and income tax rates constant, includes a
Fitch views the county's margin under the state income tax rate cap and a regionally competitive property tax rate as important measures of financial flexibility given their combined dominance of the general fund revenue base.
ECONOMY ANCHORED BY MILITARY PRESENCE
CPV is constructing a state-of-the-art 725-megawitt (MW) combined-cycle natural gas-fired power plant in the county. The project is a
The county's unemployment rate trends comfortably below state and national averages, measuring 5.5% in
TAX BASE GROWTH EXPECTED
The county's estimated market value has declined 15% between 2010 and 2013 to
The county benefits from a statewide triennial assessment process that smoothes annual volatility in tax base performance. The county is somewhat constrained on upside potential given the adopted homestead percentage of 107%, limiting annual assessment growth on certain owner-occupied residential property to no more than 7%.
FAVORABLE DEBT PROFILE
Fitch expects the county's debt burden to remain manageable. The fiscal 2015-2019 capital improvement plan totals
Fitch does not expect long-term liabilities related to retirement benefits to pressure future operations. The county provides pension benefits to its employees through two single-employer defined benefit plans and annually contributes 100% of the annual required contribution. As of
The county also provides other post-employment benefits (OPEB) to its retirees. The county funded its OPEB cost for fiscal 2013 on a pay-go basis and the UAAL associated with OPEB totaled a manageable
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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