St. Mary’s gov­ern­ment earns fa­vor­able bond rat­ing

Agen­cies com­mend ‘very strong’ bud­getary pro­file, lead­er­ship

The Enterprise - - News - By TAY­LOR DEVILLE tdev­ille@somd­news.com Twit­ter: @Tay­lorEn­tNews

Bond raters have given St. Mary’s County gov­ern­ment a fa­vor­able re­view of the county’s “strong” econ­omy and bud­getary per­for­mance dur­ing fis­cal year 2018, ac­cord­ing to one bond re­port.

Three agen­cies, Moody’s In­vestors Ser­vice, Fitch Rat­ings and Stan­dard & Poor’s Fi­nan­cial Ser­vices, vis­ited the county last month to eval­u­ate its bud­get, award­ing the county a rat­ing of AA+.

This year’s rat­ings were sim­i­lar to the county’s fa­vor­able rat­ings in the past few years, Cudmore said, adding that the county is “fol­low­ing the trend [the raters] were ex­pect­ing” dur­ing last year’s re­view.

Fol­low­ing a pol­icy in­sti­tuted by St. Mary’s com­mis­sion­ers to im­prove the county’s bond rat­ing by build­ing up re­serves, county gov­ern­ment ac­crued a sur­plus of $8.2 mil­lion, and a gen­eral fund bal­ance of $47.4 mil­lion, or 21.2 per­cent of county rev­enue, in fis­cal year 2017.

“Low debt and strong fi­nan­cial man­age­ment has al­lowed us to en­joy high credit rat­ings,” Com­mis­sioner Pres­i­dent Randy Guy (R) said in a state­ment. “Our mis­sion will be to con­tinue our strong fis­cal man­age­ment as we look to­ward an even brighter fi­nan­cial pic­ture in the com­ing years.”

County of­fi­cials ex­pect fis­cal year 2018 to close with about $6 mil­lion in op­er­at­ing sur­plus, which the county’s de­part­ment of fi­nance in­tends to add to the county’s re­serves.

In­creased prop­erty and in­come taxes, in ad­di­tion to con­ser­va­tive bud­get­ing, are the main rea­sons for the sur­plus, ac­cord­ing to county of­fi­cials. As is typ­i­cal in Mary­land coun­ties, prop­erty taxes ac­counted for al­most half of gen­eral fund rev­enue in 2017, with in­come tax con­tribut­ing 40 per­cent to to­tal rev­enues.

The fis­cal year 2019 bud­get to­tals $230.2 mil­lion, a 4 per­cent in­crease from last year’s bud­get.

The county is sell­ing $30 mil­lion in gen­eral obli­ga­tion bonds to fund cap­i­tal projects on Sept. 18.

The county’s tax base has grown con­sis­tently at an an­nual rate of al­most 2 per­cent over the past decade due to on­go­ing de­vel­op­ment and prop­erty re-eval­u­a­tions, and is es­ti­mated at $12.7 bil­lion for fis­cal year 2019, ac­cord­ing to Stan­dard & Poor’s re­port.

Stan­dard & Poor’s also com­mended the county’s “very strong” liq­uid­ity and debt pro­file, with 35.5 per­cent to­tal avail­able cash com­par­a­tive to gov­ern­ment ex­pen­di­tures. The county cur­rently has $7.7 mil­lion in out­stand­ing funds for equip­ment leases with TD Equip­ment Fi­nance Inc. and Bank of Amer­ica Pub­lic Cap­i­tal Corp.

The county al­lots fund­ing for the state pen­sion plan and the St. Mary’s sher­iff’s of­fice re­tire­ment plan, which was 65 per­cent funded in 2016. The county was li­able for $23.6 mil­lion for the state pen­sion plan in 2017, and $42.2 mil­lion for the sher­iff’s of­fice net pen­sion li­a­bil­ity in 2016. The county also con­trib­utes funds to post-em­ploy­ment ben­e­fits funds, or OPEB, and has a to­tal of $31.9 mil­lion in un­funded li­a­bil­ity for the pro­gram, which is 68.5 per­cent funded, Cudmore said.

Bond raters listed fed­eral cuts as a po­ten­tial area of con­cern for county fi­nances, given Naval Air Sta­tion Patux­ent River’s sig­nif­i­cant role in the lo­cal econ­omy, although Fitch de­ter­mined that “se­vere cuts at the fed­eral level” are “un­likely,” and prob­a­bly “would not be suf­fi­ciently se­vere as to al­ter the county’s credit fun­da­men­tals,” ac­cord­ing to Fitch’s re­port.

Bud­get work ses­sions for fis­cal year 2020 be­gin in De­cem­ber, when any pos­si­ble changes to county taxes will be dis­cussed.

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