Economic outlook improves as county credit rating boosted

By Alex Bridges

Warren County’s economic outlook remains strong and continues to improve, a financial ratings firm says in a recent report.

Standard & Poor Ratings Services raised Warren County’s credit rating from AA- to AA. Standard & Poor’s also raised the rating on the Front Royal-Warren County Industrial Development Authority’s lease revenue bonds from AA- to A+.

The credit rating upgrade should benefit taxpayers in the long run, County Administrator Douglas Stanley said in an email this week.

“Ultimately the improvement in the County’s credit rating will lead to better (lower) borrowing rates which will ultimately save the County and its taxpayers interest costs,” Stanley stated. “This is an excellent time to see our rating increased as we look to borrow money for the proposed second middle school later this year.”

The county plans to borrow $35-40 million in lease revenue bonds in the next year to build a second middle school. Stanley said it’s too early to tell the exact benefit of the county’s rating upgrade on the interest rate it can achieve for the loans.

Standard & Poor’s report also indicates that the county’s finances remain strong.

“The stable outlook also reflects our expectation that county officials will likely maintain very strong budgetary flexibility and strong budgetary performance along with very strong liquidity,” the Standard & Poor’s report states. “We do not expect to change the rating within the outlook’s two-year period.”

Standard & Poor’s findings show the county had roughly $13.8 million available in its fiscal 2012 reserves that represented 22.7 percent of spending. The county had $17.4 million in available reserves — 29 percent of expenditures following a surplus of $3.6 million – according to unaudited figures for fiscal 2013. The county has $16.5 million, or 26.8 percent of expenditures, after using $849,000 of its reserves for one-time, capital expenses, in its current fiscal period.

Stanley pointed out in a press release that the ratings upgrades show continued confidence in the county’s financial outlook. Stanley notes that the current, fiscal environment has caused many jurisdictions to see their bond ratings downgraded.

Ted Cole, senior vice president for Davenport Public Finance, said the upgrade for the county’s “issuer credit bond rating” shows the overall improvement of its financial and economic profile. This rating puts the county in a good position when it seeks financing for future capital needs, Cole indicated.

Standard & Poor’s report notes that the county’s rural characteristics limits the local economy but growth opportunities exist because of its access to Washington, D.C. More than 50 percent of the county’s work force commutes to other areas.

Standard & Poor’s states the county’s budgetary performance is “adequate” with a general fund surplus of 4.4 percent. The county showed a 5-percent deficit in fiscal 2012 but projected a 6.1 percent surplus in its general fund for fiscal 2013. The county budgeted for a 1.4 percent deficit this current fiscal period.

Standard & Poor’s report notes that the 57 percent of county’s general fund revenue for fiscal 2012 comes from property taxes.

Contact staff writer Alex Bridges at 540-465-5137 ext. 125, or abridges@nvdaily.com