NEW YORK--(Business Wire)--
Fitch Ratings assigns an 'AA' rating to St. Mary's County, Maryland's (the
county) estimated $46,120,000 general obligation (GO) bonds, consisting of
$13,055,000 consolidated public improvement tax-exempt bonds, series 2009A,
$16,945,000 consolidated public improvement [tax-exempt bonds][taxable Build
America Bonds-direct payment to issuer], series 2009B, and $16,120,000
consolidated public improvement refunding bonds, series 2009C. The bonds are
scheduled to price competitively on Nov. 17, 2009. The series 2009A and 2009B
bonds will finance county capital projects and the series 2009C bonds will
advance refund callable maturities of the county's consolidated public
improvement bonds of 2001. Fitch also affirms the 'AA' rating on the county's
$99 million outstanding GO bonds. The Rating Outlook is Stable.
The 'AA' rating reflects the county's traditionally narrow, military economy
with sound attributes, including below average unemployment rates and a rapidly
growing population. Reserve levels are solid, although they are projected to
decline given the county's utilization of general fund balance to fund one-time
expenditures and to replace declining state revenues. The debt burden is
expected to remain moderately low given the county's demonstrated willingness to
limit capital spending.
The county, with an estimated 2008 population of 101,578, has shown the second
fastest growth rate in the state this decade, with the Naval Air Station
Patuxent River complex (about 11,000 employees) and related defense contractors
attracting a young workforce to the county. Government represents a high 49.8%
of county earnings and the professional and business services sector accounts
for a substantial 23.2%, with both sectors nearly double the state average. An
emphasis on tourism and outdoor activity as a tool for economic diversification
has shown signs of success, with the county reporting slight increases in
tourist related revenue over the past year. The county's largest private
employer, St. Mary's Hospital (1,140 employees), recently merged with MedStar
Health and will now be the first network hospital in the southern part of the
state. Unemployment, at 5.6% in September 2009, has remained well below the
state and national averages, at 7.1% and 9.5% respectively. Wealth indicators
are mixed, with median household income well above that of the state and nation,
in contrast to the below average per capita personal income.
Reserve levels are sound and are expected to remain consistent with the rating
category subsequent to planned drawdowns to finance one-time expenditures and to
mitigate the effects of revenue reductions attributable to a weakened economy.
Fiscal 2008 concluded with an unreserved fund balance equal to a solid 19.5% of
general fund spending. Fiscal 2009 is anticipated to produce a total fund
balance reduction of around $9 million, subsequent to a $10 million contribution
to fund other post-employment benefit (OPEB) liabilities. The county expects
reserves to include a fully funded bond rating reserve, equal to 6% of spending,
a rainy day fund of $1.6 million, and $7 million carried forward to absorb
fiscal 2011 and 2012 state aid reductions, although revenue shortfalls depleted
a $1.3 million budget stabilization reserve. The fiscal 2010 general fund budget
was 1.6% below that approved in fiscal 2009 inclusive of a $3 million
appropriation to replace State reductions for highway funds. The county does not
plan to utilize its rainy day fund or bond rating reserve fund during the
current fiscal year and retains significant revenue raising capacity, including
a low property tax rate and a state income tax rate 0.2% below the allowable
maximum.
A demonstrated ability to reduce capital spending in response to economic
dictates is expected to maintain debt at moderately low levels in spite of
growth needs fueled by the strong population expansion. With this issue, the
debt burden equals $1,232 on a per capita basis and 1.3% of market value.
Amortization is above average at 66.4% within 10 years. The fiscal years
2011-2015 capital improvement plan totals $195 million, with tax-supported debt
financing representing slightly more than one-third.
Additional information is available at www.fitchratings.com.
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Fitch Ratings, New York
Barbara Ruth Rosenberg, +1-212-908-0731
Alexandra Knight, +1-212-908-9181
or
Cindy Stoller, +1-212-908-0526 (Media Relations)
cindy.stoller@fitchratings.com
Copyright Business Wire 2009
