County receives top credit rating
Published 12:00 am Tuesday, July 27, 2004
A national credit rating service recently bestowed the best possible credit rating on Shelby County, ranking the county the best in the state and placing it among an elite group of counties nationwide.
Moody’s Investor Service issued a credit rating of Aa1 for Shelby County, a rating which only 38 counties nationwide can claim. Brian Kennedy, an analyst with Moody’s, said the company issues opinions on credit-worthiness to public entities such as school systems and government agencies.
Bond holders and investors use the credit ratings &uot;to judge their appetite for that entity’s bonds or debt,&uot; Kennedy said.
One of the main factors which contributed to the county’s good credit report is the complete lack of public debt.
&uot;The county currently has no debt outstanding and our rating reflects that,&uot; Kennedy said.
Kennedy explained the four factors Moody’s uses to set credit ratings for entities. First, the county’s economy and tax base is considered. This includes the overall wealth of citizens, unemployment figures and growth rates.
Secondly, Moody’s considers the county’s debt, and how much of each year’s budget is devoted to reducing that debt. Since Shelby County had no outstanding debt, this factor was a particular strong point for Shelby County, Kennedy said.
Moody’s also looks at the county’s revenues and how they meet the county’s expenditures. Kennedy said the staff at Moody’s considers how much surplus is generated into the general fund balance of the county.
Also, Moody’s considers the county’s management, including planning and execution of capital projects.
Shelby County’s Finance Manager Butch Burbage said the county absolved most of its outstanding debt by issuing an additional 1-cent sales tax in 1996. That tax funded projects such as the courthouse expansion, and the extra tax generated enough revenue to fund sewer and water expansions in the county.
The extra-cent sales tax ended several years earlier than expected, in 2001, Burbage said.
The stellar rating could reap benefits for the county in the near future, once the county considers issuing bonds for capital projects. According to Kennedy, the credit rating will help county administrators determine what types of interest rates the market will set.
One example of upcoming projects the county could benefit with lower interest rates from the Aa1 credit rating is a new water plant for the county. The county has already bought land outside of Wilsonville, near the steam plant for the project.
Burbage said the Aa1 rate will lower the overall costs of the project, as well as improve the business climate in Shelby County.
&uot;This rate will definitely play a significant role in the interest you would pay in that,&uot; he said. &uot;It will help us on just about everything we do. Having a good credit rating means a lot in the business community – even in business recruiting.&uot;
The county’s financial recognition began years ago, according to County Commissioner Don Armstrong, chairman of the Commission Finance Committee.
&uot;When I was first elected to the Commission, we had to make some very difficult decisions. The county faced some significant financial challenges,&uot; Armstrong said. &uot;We had to take charge of our financial health and establish conservative policies. The commission took the heat, met those challenges and hired talented personnel.
&uot;This rating validates the steps we’ve had to take and the controls and procedures we put in place. We empowered a management team to go forward to proactively manage projects and develop initiatives to achieve our goals,&uot; he said