Fitch assigns an 'AAA' rating to Baltimore County, MD's
(the county) approximately $89 million Metropolitan District Bonds,
70th Issue and $111 million Consolidated Public Improvement Bonds,
2006 Series. Both series of bonds are scheduled to sell competitively
on September 13, 2006. The Metropolitan District bonds will mature
serially on September 1, 2007 through 2036 while the Consolidated
Public Improvement bonds mature serially beginning September 1, 2007
through 2026. Concurrently, Fitch affirms the 'AAA' on approximately
$434 million in outstanding metropolitan district bonds and
approximately $469 million in outstanding general obligation (GO)
bonds, both of which are secured by the county's full faith and credit
pledge. The Rating Outlook is Stable.
The 'AAA' rating is based on Baltimore County's diverse and broad economy and tax base, above-average wealth levels, and consistently strong financial performance contributing to solid reserves and high levels of pay-as-you-go capital funding. County debt levels are moderate with rapid amortization, but a recent consent decree involving the county's sewer system will require additional capital investment that may lead to significant rate increases to sustain the self-supporting nature of the utility operation.
Baltimore County, with a current estimated population of 786,113, possesses a substantial employment base centered in 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 a major focus of economic development. Further expansions in federal and military contract positions are envisioned as recent Base Realignment and Closure recommendations affecting military installations in neighboring counties are expected to bring up to 2,700 direct and indirect jobs to the county by 2011. Residential unemployment is well below the U.S. but typically exceeds the state average, reflecting the county's proximity to Baltimore, Maryland's largest urban center. Population growth continues to be steady, fueling tax-base expansion that is balanced between commercial and residential uses. Income levels only slightly exceed those of the affluent state but are well above the U.S. average.
County finances remain stable as a result of strong financial management practices and conservative budgeting. As it did with income tax receipts during the bull market years of the late 1990s, the county is dedicating the exceedingly high transfer and recordation taxes it receives from the current housing boom to one-time capital expenditures, rather than operations, which should keep financial performance consistent if the housing development and appreciation slows. Also, the additional pay-as-you-go funding should keep debt levels manageable.
Fiscal 2005 results show an unreserved general fund balance of $237 million, or 17.9% of expenditures, up from $173 million, or 14% of spending in fiscal 2004. The fiscal 2005 audit included a $68 million designation for revenue stabilization, which is in compliance with the county's 5% stabilization account minimum. A multi-year financial plan anticipates reducing reserves down to the policy floor, although assumptions are quite conservative. Preliminary figures for fiscal 2006 reflect an $8 million general fund surplus and the county has budgeted over $112 million in pay-as-you-go funding for fiscal 2006. Prudently, the county has appropriated $45 million in the 2007 budget from its fund balance to an Other Post Employment Benefit (OPEB) reserve. While the county's income tax rate remains unchanged for fiscal 2007, the property tax rate has been reduced by 1.5 cents to provide residents some tax relief.
The metropolitan district (the district) is part of the county government and provides water, sewerage and drainage services to the majority of residents within the county. Both water and sewerage are treated by the City of Baltimore and the county contributes to infrastructure improvements within the city's system. The current offering is secured by the county's full faith and credit pledge but debt service is actually paid from rates and charges generated by the self-supporting district; therefore all of the outstanding district debt is excluded from the county's debt levels.
Future capital needs are substantial but manageable, despite capital needs associated with a consent decree related to sanitary sewer overflows. Inclusive of the debt currently being issued, overall net tax-supported debt ratios are $1,009 per capita and 1.41% of full market value. The six-year capital improvement program, which covers fiscal years 2007 through 2012 totals $1.69 billion, is up modestly from $1.5 billion and includes a variety of utility, public works, and school projects with bond funding contributing 44% to the plan. Currently, compliance with the consent decree, inclusive of operational costs related to enhanced systems monitoring, is estimated to cost $811 million by 2019 and management estimates that two-thirds of required costs will be funded within by fiscal 2012.
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.
The 'AAA' rating is based on Baltimore County's diverse and broad economy and tax base, above-average wealth levels, and consistently strong financial performance contributing to solid reserves and high levels of pay-as-you-go capital funding. County debt levels are moderate with rapid amortization, but a recent consent decree involving the county's sewer system will require additional capital investment that may lead to significant rate increases to sustain the self-supporting nature of the utility operation.
Baltimore County, with a current estimated population of 786,113, possesses a substantial employment base centered in 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 a major focus of economic development. Further expansions in federal and military contract positions are envisioned as recent Base Realignment and Closure recommendations affecting military installations in neighboring counties are expected to bring up to 2,700 direct and indirect jobs to the county by 2011. Residential unemployment is well below the U.S. but typically exceeds the state average, reflecting the county's proximity to Baltimore, Maryland's largest urban center. Population growth continues to be steady, fueling tax-base expansion that is balanced between commercial and residential uses. Income levels only slightly exceed those of the affluent state but are well above the U.S. average.
County finances remain stable as a result of strong financial management practices and conservative budgeting. As it did with income tax receipts during the bull market years of the late 1990s, the county is dedicating the exceedingly high transfer and recordation taxes it receives from the current housing boom to one-time capital expenditures, rather than operations, which should keep financial performance consistent if the housing development and appreciation slows. Also, the additional pay-as-you-go funding should keep debt levels manageable.
Fiscal 2005 results show an unreserved general fund balance of $237 million, or 17.9% of expenditures, up from $173 million, or 14% of spending in fiscal 2004. The fiscal 2005 audit included a $68 million designation for revenue stabilization, which is in compliance with the county's 5% stabilization account minimum. A multi-year financial plan anticipates reducing reserves down to the policy floor, although assumptions are quite conservative. Preliminary figures for fiscal 2006 reflect an $8 million general fund surplus and the county has budgeted over $112 million in pay-as-you-go funding for fiscal 2006. Prudently, the county has appropriated $45 million in the 2007 budget from its fund balance to an Other Post Employment Benefit (OPEB) reserve. While the county's income tax rate remains unchanged for fiscal 2007, the property tax rate has been reduced by 1.5 cents to provide residents some tax relief.
The metropolitan district (the district) is part of the county government and provides water, sewerage and drainage services to the majority of residents within the county. Both water and sewerage are treated by the City of Baltimore and the county contributes to infrastructure improvements within the city's system. The current offering is secured by the county's full faith and credit pledge but debt service is actually paid from rates and charges generated by the self-supporting district; therefore all of the outstanding district debt is excluded from the county's debt levels.
Future capital needs are substantial but manageable, despite capital needs associated with a consent decree related to sanitary sewer overflows. Inclusive of the debt currently being issued, overall net tax-supported debt ratios are $1,009 per capita and 1.41% of full market value. The six-year capital improvement program, which covers fiscal years 2007 through 2012 totals $1.69 billion, is up modestly from $1.5 billion and includes a variety of utility, public works, and school projects with bond funding contributing 44% to the plan. Currently, compliance with the consent decree, inclusive of operational costs related to enhanced systems monitoring, is estimated to cost $811 million by 2019 and management estimates that two-thirds of required costs will be funded within by fiscal 2012.
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.