Fitch Ratings assigns an 'AA' rating to Queen Anne's County, Maryland's roughly $30 million general obligation (GO) bonds, including $12.2 million public facilities bonds, series 2009A, and $17.7 million public facilities bonds, series 2009B. Both series are scheduled for competitive sale on Oct. 13, 2009; series 2009A is expected to be sold as tax-exempt bonds, while series 2009B may be priced as tax-exempt bonds or as taxable Build America Bonds, at the option of the issuer. Concurrently, Fitch affirms its 'AA' rating on the county's approximately $66 million of outstanding GO bonds. The Rating Outlook is Stable.
The 'AA' rating reflects the county's healthy reserve levels, moderately low debt burden, manageable capital needs, and fairly limited economy. While the county's waterfront land, rural setting, and affordable land prices attract residents from the more densely populated counties to the west, the local employment base is somewhat centered around several stable manufacturers, and the construction, retail, and leisure and hospitality industries. The county's rating also benefits from recently implemented debt policies, which should help to guide the capital planning process and limit the debt burden to the affordable levels that have been maintained historically.
Queen Anne's County is located on the eastern terminus of the Chesapeake Bay Bridge, directly across the bay from Anne Arundel County. The 2000 census recorded the county's population at 40,563, a nearly 20% increase from the 1990 census, and estimates for 2008 show additional growth of 15.5%. Given the fairly limited economy, roughly 60% of the labor force commutes outside the county, with most workers crossing the Bay Bridge to jobs in the deep and diverse Baltimore-Washington market. While the county's unemployment rate has increased year-over-year, recorded at 6.3% as of August 2009, it has consistently ranked below those of the region, state, and nation. County per capita personal income (PCPI) has increased slightly relative to the state and the nation over the past three years; the county's PCPI equaled 96.6% of the state's high average and 116.2% of the national average in 2007.
Financial operations are solid, characterized by the maintenance of adequate reserves and liquidity, as well as significant revenue-raising capacity. The unreserved general fund balance for fiscal 2008 was equal to $4 million, or 3.6% of recurring expenditures and transfers out. When considering the county's legally required contingency account, which equals 7% of operating revenue, unencumbered reserves total slightly over 10% of spending. The county's income tax rate of 2.85% is well under the state cap of 3.2%, and although county officials have no plans to increase the rate, doing so would provide approximately $4 million of additional financial flexibility. Fiscal 2009 is expected to end with a small surplus, despite some general fund revenue pressure, and the fiscal 2010 budget was adopted with conservative revenue projections and prudently managed expenditures.
Debt levels are moderately low and should remain so given manageable capital needs and above-average amortization of 68% within 10 years. The county's capital planning process will also benefit from newly adopted debt policies, limiting GO debt to 2.5% of county taxable assessed value and $3,000 per capita. The capital plan for fiscal years 2010-2015 totals $180 million, with school needs representing almost 60% of projects. Bond proceeds are programmed to finance about half of the program, with operating budget contributions and grants funding most of the balance.
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Amy R.
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or
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Email: cindy.stoller@fitchratings.com
