Bangkok--20 Oct--Standard & Poor's
Standard & Poor's Ratings Services raised its rating on Cumberland County, Maine's general obligation (GO) debt one notch to 'AA+' from 'AA' based on the county's diverse economic base; limited service responsibilities; and recently enacted legislation that caps jail expenditures at a fixed level, dramatically reducing operating risk to an expenditure that accounts for 48% of the budget. The outlook is stable.
The rating service also assigned its 'AA+' rating, and stable outlook, to the county's $1.7 million series 2008 GO bonds.
In Standard & Poor's opinion, additional rating factors include the county's diverse regional economy with low unemployment; good household income with median household effective buying income at 104% of national levels; extremely strong market value of $149,835 per capita; good reserves and stable revenue base; and very low debt burden with a rapid debt amortization schedule.
The rating service opines that tax levy limits imposed by LD-1, which could pose budgetary challenges during an economic downturn as growth in development and income slows within underlying communities, are a mitigating factor.
"We believe Cumberland County officials will continue to manage the county's financial operations with good reserves," said Standard & Poor's credit analyst Victor Medeiros. "Furthermore, it is our belief that the county's debt burden will remain low given its capital needs and limited service obligations."
Driven mainly by new construction and real estate appreciation, the county's property tax base exhibited strong growth between fiscals 2002 and 2008; state equalized valuation increased by an average of 12% annually during this period. Consistent with national trends, however, development has since slowed to more-moderate levels. Assessed value totaled $41.5 billion in fiscal 2008, or, in Standard & Poor's opinion, an extremely strong $149,835 per capita.
The county realized a slight net general fund deficit for fiscal 2007 and closed the unreserved general fund with a $3.5 million balance, or, in Standard & Poor's opinion, a strong 11.7% of expenditures. Overall, reserves are down from $6.6 million, or 22% of expenditures, in 2004 due to the county's funding of needed capital improvements. Officials are projecting undesignated reserves to decrease further to about 8% of expenditures at fiscal year-end 2008, which Standard & Poor's still views as good.
Standard & Poor's views direct debt levels as very low due primarily to the county's limited service obligations. Following this issue, the county will have roughly $9.8 million of direct debt outstanding, resulting in a direct net debt of $35 per capita. Amortization of debt outstanding is extremely rapid with officials retiring 85% of principal by 2012, 92% by 2019, and 100% by 2028.
The rating action affects roughly $9.8 million of debt outstanding.
Complete ratings information is available to subscribers of RatingsDirect, the real-time Web-based source for Standard & Poor's credit ratings, research, and risk analysis, at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com; select your preferred country or region, then Ratings in the left navigation bar, followed by Credit Ratings Search.
Media Contact:
Edward Sweeney, New York, (1) 212-438-6634
[email protected]
Analyst Contacts:
Victor Medeiros, Boston (1) 617-530-8305
Jennifer L Rosso, New York (1) 212-438-7964