2008-07-22 13:35:06 -
- Fitch Ratings has assigned an 'AA+' rating to Baltimore County, Maryland's (the county) estimated $36.7 million certificates of participation (COPs) (Equipment Acquisition Program), Series 2008. The COPs are scheduled to price via competitive sale on July 29, 2008. The COPs will finance the acquisition of heavy equipment for use in the county's parks and public safety units as well
as information technology hardware for various departments. In addition, Fitch has affirmed the following outstanding ratings for the county:
--$651.3 million general obligation (GO) consolidated public improvement bonds at 'AAA';
--$576.2 million GO metropolitan district bonds at 'AAA';
--$49.7 million certificates of participation at 'AA+'.
The Rating Outlook is Stable.
The 'AA+' rating on the COPs reflects solid legal provisions and the essentiality of the financed projects. COPs payments are subject to annual appropriation. The 'AAA' rating on Baltimore County's GOs is based on its broad economy and tax base, above-average wealth levels, moderate debt levels with rapid amortization, and excellent financial management. Consistently strong fiscal performance has contributed to solid reserves and high levels of pay-as-you-go capital funding.
With an estimated 2007 population of 788,994, Baltimore County possesses a substantial employment base centered on planned development corridors that largely surround the independent city of Baltimore. Federal installations, health care, financial services, and higher education predominate, with skilled manufacturing a growing sector and major focus of economic development. Further expansions in federal and military contract positions are envisioned as recent Base Realignment and Closure (BRAC) recommendations affecting military installations in neighboring counties are expected to bring up to 3,900 direct and indirect jobs to the county by 2011. Residential unemployment (4.0% in May 2008) is well below that of the U.S. (5.5%) but exceeds the state average (3.8%). Per capita personal income levels only slightly exceed those of the affluent state, by 3.7%, but are well above the U.S. average, by 23.7%. The Baltimore-Towson metro area has been hard hit by the housing market with large increases in foreclosures and projected declining home prices over the next five years. The county itself has seen average home prices decline, although the number of foreclosure events have decreased from the fourth quarter of 2007 to the first quarter of 2008. However, important factors such as a phased-in triennial property tax assessment and the homestead property tax cap, which limits taxable AV growth to 4%, are likely to somewhat mitigate financial pressure from the housing market over the longer term.
County finances remain stable as a result of strong financial planning and conservative budgeting. The $1.7 billion fiscal 2009 general fund budget includes $139 million for pay-as-you-go capital and absorbs an estimated $40 million in reduced or unrealized fiscal 2009 state revenue without increasing the property or income tax rate. Fiscal 2007 results show an unreserved general fund balance of 16.9% of spending, a slight decline from the 19.1% of fiscal 2006, and the county estimates that fiscal 2008 reserves will equal approximately 14% of revenues. The planned drawdowns represent the implementation of the county's plan to reduce its reserves over several years to 7% of revenues through appropriation of pay-as-you-go funding to its capital budget. Fitch believes this level is adequate for the county's needs at the 'AAA' rating level.
Future capital needs are substantial but manageable. Overall net tax-supported debt ratios are a moderately low $1,207 per capita and 1.2% of market value; debt ratios exclude outstanding metropolitan district debt, which is paid from rates and charges generated by the self-supporting water and sewer district, although secured by the county's full faith and credit pledge. The six-year capital improvement program (CIP), which covers fiscal years 2009-2014, totals $1.8 billion and includes a variety of utility, public works, and school projects, with tax-supported bond funding contributing 44% to the plan and revenue supported bonds financing about 33%.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
Fitch Ratings, New York
Barbara Ruth Rosenberg, +1-212-908-0731
Alexandra Knight, +1-212-908-9181
Media Relations:
Sandro Scenga, +1-212-908-0278
