During the course of routine surveillance, Fitch Ratings affirms the 'A+' rating of Baltimore Maryland's (the city) general obligation bonds (GOs) series 1998B, through and including series 2007B and simultaneously withdraws it. The Rating Outlook is Stable. Fitch has withdrawn the ratings due to lack of ongoing disclosure to Fitch. Fitch will no longer provide rating coverage on the city or the outstanding bonds.
The underlying 'A+' rating reflects Baltimore's sound reserve levels, and an economy expanding upon its traditional strengths in education and health care. Economic indicators such as per capita money income, the unemployment rate, and market value per capita remain below average. Debt levels have moderated, and overall debt as a percentage of market value is now well within the parameters of the rating category.
With an economy buttressed by the strong presence of education and health care, the city is continuing its aggressive plan to revitalize several neighborhoods other than the downtown/Inner Harbor area, while simultaneously attracting high-quality commercial development to the downtown area. Ongoing population losses remain a credit concern, although the rate of decline has lessened. The city's population declined 1.2% on an annual basis through the 1990s, and the rate has slowed to -0.3% from the 2000 census to the 2008 census population estimate. Per capita income is significantly below state and national averages. The July 2009 unemployment rate of 11.3% continues the trend of city unemployment rates above state and national averages.
The city's general fund reserve levels are solid, in spite of a fiscal 2008 deficit of $41 million. Available reserves, consisting of a budget stabilization fund below policy levels and the unreserved fund balance, equaled $126 million or 9.1% of spending, below the 12.2% of fiscal 2006 and the 11.3% of fiscal 2007. Fiscal 2009 projections indicate revenues slightly below budget, largely attributable to a softening in the housing related recordation and transfer taxes. The flat fiscal 2010 proposed budget includes lay-offs and the elimination of general fund vacancies. In fiscal 2009 and 2010, the city suspended plans to reduce the property tax rate by $0.02 annually.
Overall debt levels, including convention center hotel obligations, have declined to 4.4% of full market value and remain moderately low on a per capita basis at $2,031. Excluding hotel convention center obligations, which would be considered self-supporting after three years of revenue coverage of debt service, debt levels are a more moderate 3.4% and $1,559, respectively. Amortization of GO bonds and conditional purchase agreements is above average at 68% in 10 years. The fiscal years 2010-2015 capital improvement program (CIP) totals $3.3 billion, with significant investments related to the city's self-supporting utility enterprises.
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cindy.stoller@fitchratings.com
