TEXT-Fitch affirms Wilson County, N.C. GOs at 'AA'
Nov 26 - Fitch Ratings has affirmed its rating on the following bonds of Wilson County, North Carolina: --$14.8 million general obligation (GO) bonds at 'AA'. The Rating Outlook is Stable. SECURITY The bonds are general obligations of the county, backed by its full faith, credit, and unlimited taxing power. KEY RATING DRIVERS SOUND FINANCIAL PERFORMANCE: The county demonstrates healthy financial flexibility through its maintenance of strong reserves. LOW DEBT BURDEN: The debt burden is low and is expected to remain so given the rapid amortization of existing debt and the county's manageable borrowing plans. RETIREE COSTS WELL-FUNDED: The county participates in the state-wide pension plan, among the best funded of the states. Annual pension contributions are very modest relative to the county's budget, and other post-employment liabilities are manageable. LIMITED ECONOMY: Wilson County's economy exhibits an above-average level of concentration in manufacturing, natural resources, and mining, and above-average taxpayer concentration. Economic indicators are weak, including below-average income levels and unemployment rates consistently above the state and nation. CREDIT PROFILE Located 45 miles east of Raleigh, Wilson County, with a population of 81,452 in 2011, is an agricultural and manufacturing center for the eastern-central portion of North Carolina. CONTINUED SOUND FINANCIAL PERFORMANCE The county's financial position continues to be sound. In fiscal 2011, the county realized a $5.3 million general fund operating surplus after transfers, equal to 5.5% of spending. The unrestricted general fund balance (the sum of committed, assigned, and unassigned per GASB 54) equalled $26.3 million or a solid 26.9% of total spending, and is well above the county's fund balance policy of maintaining reserves above 18% of spending. In addition, the county's reserve for state statute, which is generally considered unassigned outside North Carolina, enhances flexibility further and is equal to $5.8 million or an additional 6% of spending. For fiscal 2012, management expects to increase total fund balance by $4.7 million. Positive year-end results for fiscal 2012 are attributed to higher than budgeted collections of property and sales taxes, as well as below-budget expenditures in public safety, human services, fleet repairs, and gas and fuel. The unassigned fund balance is expected to equal $19 million at year-end, or 21% of spending, and is $1.1 million or 6% higher than a year ago. EXPECTATIONS FOR FISCAL 2013 The fiscal 2013 general fund budget incorporates a $6.2 million fund balance appropriation, which is 9% higher than last year. However, the current estimate indicates using no more than $2 million of the appropriated fund balance at the conclusion of the year for one-time capital expenditures, if necessary. Management customarily budgets revenues conservatively and expenditures liberally, and works throughout the year with its departments to reduce costs. According to management, the county is committed to replenishing reserves in fiscal 2014 should a fiscal 2013 draw bring them below policy levels. However, Fitch expects that the county will continue to maintain healthy reserves above policy levels. HIGH UNEMPLOYMENT PERSISTS Unemployment is 11.8% as of September 2012, which is significantly higher than both the state (8.9%) and the nation (7.6%). Unemployment has declined during the last 12 months, largely reflecting a reduction in laborforce, as the county's job base contracted 0.6% during the period. Fitch notes signs of limited economic diversification, particularly within the pharmaceutical and life sciences sectors. In addition, the county's largest employer, Bridgestone Tires, is investing $250 million over a 10-year period which began in 2006 in its tire manufacturing factory. Bridgestone is the largest private sector employer with 2,000 employees and also the county's largest taxpayer, accounting for 5.4% of fiscal 2011 assessed value (AV). Wealth levels, as measured on a per capita and median household basis, are 15%-25% below the state and nation. LOW DEBT BURDEN Overall debt levels remain very low at $444 per capita and 0.6% of market value. The county's debt amortizes at a very rapid pace with nearly 80% of outstanding principal scheduled to mature within 10 years. Annual debt service represented a manageable 6.8% of fiscal 2011 total spending. The county is in the process of revising its long-term capital improvement program (CIP), but does not anticipate issuing debt in the near future. The county does not have any exposure to variable-rate debt, derivatives, or short-term notes. RETIREE COSTS WELL-FUNDED County employees participate in the statewide Local Government Employees' Retirement System (LGERS), a cost-sharing multiple-employer plan. The actuarial requirement of $1.7 million for the plan equals 1.7% of fiscal 2011 general fund spending and is considered manageable. LGERS is highly funded at 99% as of the June 30, 2010 valuation. Using Fitch's more conservative 7% discount rate, the funded ratio is still very high at 97%. The county funds its other post-employment benefits (OPEB) liability on a pay-as-you-go basis, which in fiscal 2011 was $492,000 or a low 0.5% of general fund spending. The amount paid for the year was slightly less than 20% of the annually required contribution. Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings. In addition to the sources of information identified in Fitch's Tax-Supported Rating Criteria, this action was additionally informed by information from Creditscope, University Financial Associates, S&P/Case-Shiller Home Price Index, IHS Global Insight, and the National Association of Realtors. Applicable Criteria and Related Research: --'Tax-Supported Rating Criteria' (Aug. 14, 2012); --'U.S. Local Government Tax-Supported Rating Criteria' (Aug. 14, 2012). Applicable Criteria and Related Research: Tax-Supported Rating Criteria U.S. Local Government Tax-Supported Rating Criteria
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