S&P Cites Mahoning County Economy as ‘Weak’
YOUNGSTOWN, Ohio – Standard & Poor’s Global Ratings has increased Mahoning County’s long-term bond rating to AA- from A+, despite citing the economy as “weak” in its latest review of the county’s financial progress, reported Mahoning County Auditor Ralph Meacham at the board of commissioners meeting Thursday.
The bond rating is an upgrade from the independent rating agency. “This is a big deal for the county because it reduces what we have to pay when we have to go out and borrow,” Meacham said.
However, the report stated the economy as weak due to, “projected per capita effective buying income at 85% of the national level and per capita market value of $51,048, which is below that of its higher rated peers.”
Meacham said the community should not be worried about S&P reporting the economy as weak because, “It’s moving like a glacier, it’s not a wildfire,” he said.
S&P also stated an aging population in the county as a factor of the rating. According to the U.S. Census Bureau, the county’s population was 238,823 in 2010 and is expected to drop to 224,680 in 2020.
The population has been decreasing since the closure of the steel mills in the 1980s and with the recent closing of Northside Medical Center and the pending closure of the General Motors Lordstown plant, there is potential for further population decline, Meacham added.
“We’ve lost some major employers and take a look around, as a population we’re aging around here,” Meacham said. “It’s not a reason for alarm but awareness to get in front of. The obligation is to plan before a crisis.”
Beyond the weak economy rating, the county got assessed for having a “strong” budgetary performance and management; and a “very strong” budgetary flexibility, liquidity, debt and contingent liability position.
The county achieved its third consecutive operating surplus in 2017 of $2.5 million in the general fund (including its criminal and administrative services fund) or 3.8% of expenditures, and balanced results across all governmental funds of $866,000, or 0.5% in fiscal 2017, S&P stated.
However, the county’s 2018 operating budget has a 10% loss in revenues since it is no longer permitted to tax managed care organizations. “We’ve demonstrated to the county the ability to work our way through that, but it will just be tight,” Meacham said of the MCO loss.
The county has seen strong management, with good financial policies and practices under its financial management assessment (FMA) methodology. “A good FMA indicates financial practices exist in most areas, but that governance officials might not formalize or monitor all of them on a regular basis,” S&P stated in its report.
Budgetary flexibility is very strong due to an available fund balance in fiscal 2017 of 21% of operating expenditures, or $14 million, which is up from 12.7%, or $11.2 million in 2015.
The county’s liquidity is very strong, with total government available cash at 67.2% of total governmental fund expenditures.
And its debt and contingent liability position is very strong, with debt service carrying charges at 2.7% of expenditures and net direct debt is 22.4% of total governmental fund revenue. Overall net debt is low at 1.6% of market value.
Additionally, the county saw its total assessed valuation increase slightly from prior years from $4.108 billion to $4.186 billion.
“That’s a good thing,” Meacham said. “That means our tax base is increasing and our real estate property is increasing in value.”
The county’s largest employer is Mercy Health Partners, which employs 3.03% of the county population, followed by the county government at 1.72%, Steward Health Care Health System at 1.61% and Youngstown State University at 1.21%.
“We don’t have any major employers coming to the area. In fact, we all know we’ve lost a lot of them,” Meacham said. “We need ways to keep young people employed here and until that turns I don’t see that coming on the near horizon. So government is going to have to act more efficiently and make do with less.”
Pictured: Mahoning County Auditor Ralph Meacham gives an annual financial review of the county at the board of commissioners meeting.
Copyright 2023 The Business Journal, Youngstown, Ohio.