As Anne Arundel County prepares for a bond sale issuance to occur on March 25, Fitch Ratings has assigned a AAA bond rating to the county’s General Obligation bonds.
An article in the Business Wire, highlights the key rating drivers.
VERY STRONG ECONOMIC BASE: Significant credit strength is derived from Anne Arundel County’s economic and employment position. The county is in close proximity to two major employment markets in Washington D.C. and Baltimore. Wealth levels are considerably higher than national benchmarks and growing at a healthy pace. Growth in county employment is also strong. Fitch views favorably the significant presence of the federal government as the key driver of regional economic activity.
RESERVES SATISFACTORY, CONSTRAINED BY CODE: Current unrestricted general fund reserves are viewed as satisfactory, calculated by Fitch at roughly 8% of spending in fiscal year 2014. The county’s code establishes limits on reserve accumulation which we view as fairly restrictive, considering the general fund’s dependence on income taxes for operations and a cap on annual property tax levy growth.
IMPORTANT REVENUE-RAISING CAPACITY: Important revenue raising capacity is retained given the county’s low income tax rate, tempering the risk associated with the cap on the annual property tax levy. Income taxes generate approximately 35% of total general fund revenue. The strong area economy has supported fairly steady growth in income tax receipts.
AFFORDABLE LONG-TERM LIABILITIES: Debt metrics are expected to remain moderate despite the expectation of higher debt issuance to fund certain education and public safety capital needs. Pension funding levels are adequate and the aggregate unfunded actuarial accrued liability (UAAL) represents a manageable burden relative to the county tax base. The county continues to make progress towards full funding of the actuarial required contribution (ARC) for its other post-employment benefit (OPEB) liability, and total carrying costs for debt, pension, and OPEB consume an affordable share of the total spending.
More information from the Fitch analysis can be found in the article.