The current offering will finance various capital projects within the county. The notes are expected to price via competition on
The Rating Outlook is Stable.
The county pledges its full faith and credit and unlimited taxing power for the repayment of principal and interest.
KEY RATING DRIVERS
IMPROVED FINANCIAL PERFORMANCE AND RESERVES: The county has improved annual financial performance as demonstrated by recent positive operating margins across various funds, increased reserves, and an ability to maintain adequate financial flexibility under a recent, more restrictive state law limiting revenue growth.
STRENGTHENED MANAGEMENT PRACTICES: Financial management is strong and has improved performance with conservative budgeting and implementation of multi-year forecasting.
SIGNIFICANT TAX BASE DECLINES REVERSING: The county tax base is preliminarily expected to grow 2.81% in 2015 reversing a cumulative 22% AV decline since 2008. Significant new commercial/industrial development activity coupled with stabilizing residential values is expected to generate tax base growth over the near term.
AVERAGE ECONOMIC PROFILE: Following a significant spike in county unemployment rates in 2009 and 2010, overall county population, labor force and employment levels have all exhibited stronger than state and national growth rates and greatly improved county unemployment rates. County wealth levels are generally on par with state and national levels.
MANAGEABLE LONG-TERM LIABILITIES: The overall debt burden is moderate and amortization is rapid. Pension costs should remain manageable, given state-wide changes in employee contributions. Other post-employment benefit (OPEB) costs are minimal. Enterprise operations are expected to remain self-supporting.
The rating is sensitive to shifts in fundamental credit characteristics including the county's strong financial management practices and expectations for sustained moderate economic and tax base growth. The Stable Outlook reflects Fitch's expectation that such shifts are highly unlikely.
IMPROVED OPERATING PERFORMANCE AND RESERVES
Over the past two years the county has restored structural balance to the general and various other government funds and demonstrated an ability to maintain adequate financial flexibility despite a 2011 state law that limits growth in property tax revenue. Balanced general fund performance was enhanced by transfers in from various enterprise/special revenue funds which posted operating surpluses in 2012 and 2013. As these transfers may be non-recurring, general fund balance was achieved through modest tax rate increases offsetting tax base declines; improving sales tax revenues; staffing and benefit cost cuts; and more conservative budgeting offsetting increased tax delinquencies.
Net general fund operating surpluses in 2012 and 2013 resulted in a total
For fiscal 2013, property taxes comprise slightly over 50% of general fund revenues followed by sales taxes at 19% and charges for services at 15%. Leading general fund expenses are for public safety at 60% not including the county federal inmate program.
The county budgets and accounts for the operations of its nursing home and federal inmate fund as well as the health and social services fund independent of the general fund and annually lapses fund surplus, if any, back to the general fund. Management's goal is to insure that these funds are at a minimum self-supporting without any general fund support. Fitch believes management has instituted strong oversight and monitoring procedures and that these funds pose moderate financial risk to the general fund.
Management indicates that fiscal 2014 general fund performance is tracking positively to budget with continued sales tax revenue growth, up a very strong 16.7% January through May compared to prior year period. Managements' general fund forecast indicates 2014 will close with no material changes to overall reserves. Fitch believes that such projections are reasonable given year-to-date performance and the county's conservative budgeting approach.
RECOVERING ECONOMY; MODERATE GROWTH EXPECTED
The county's longtime manufacturing dominated-economy is proximate to the
This and other losses caused county unemployment rates to spike to over 10% for 2009 and 2010. The county population and labor force remained stable and growing. Recent commercial/industrial activity within the county's multiple business/office parks has improved the county unemployment rate to 6.1% in
Over the past two years the county has benefitted from improved interstate access via
The county employment base includes numerous educational institutions, two large healthcare providers and numerous global commercial/industrial firms. Top current employers include the city and county governments, the county school district,
The county tax base is predominantly residential (72% of 2013 equalized value) and contracted a high 22% between 2008 and 2014 due to declines in home prices. Preliminary state estimates for county 2015 valuation indicate a 2.8% valuation increase for 2015.
MANAGEABLE LONG-TERM LIABILITIES
The county's credit profile benefits from moderate overall debt, rapid amortization (91% retired in 10 years), and manageable future borrowing plans. Overall debt is
The county is evaluating issuing approximately
The county participates in a state-run defined benefit pension plan, which is well funded at nearly 100% as of its 2012 valuation or a Fitch-estimated 98% under a 7% rate of return assumption. Actuarially-based payments for the plan are low at
The county adopted a new other post-employment benefit health insurance policy effective
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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