S&P Upgrades Mahoning County’s Bond Rating to AA-
YOUNGSTOWN, Ohio – Standard & Poor’s Global Ratings has increased Mahoning County’s long-term bond rating to AA- from A+ and assigned the county’s 2018 general bonds the SP-1+ rating.
“The raised rating reflects our opinion of the county’s ability to adjust to changes in revenues while continuing to achieve positive financial operations and grow its reserves driven by its conservative budgeting and strength of management,” S&P said in its ratings report. “It also reflects our views that this will continue over our two-year outlook horizon given the city’s track record.”
What helped boost the rating was a surplus in the general fund, good financial policies, flexibility in the budget, strong liquidity, strong debt contingent liability position and a strong institutional framework score.
Mahoning County last year recorded its third consecutive operating surplus, with $2.5 million in its general fund, or 3.8% of expenditures, and “balanced results across all governmental funds of $866,000, or 0.5%.” Meanwhile, the 2018 budget assumes a 10% loss in revenue though the operating fund is expected to end the year with another surplus.
On the management front, S&P upgraded the county’s rating to “good” from “standard.” It noted the county’s cash reserve policy, its policy to set the first 60% of revenues from Hollywood Gaming at Mahoning Valley Race Course aside for unassigned general fund use, monthly investment reports and budgetary assumptions that rely on three years of historical data and conservative sales tax revenue projections.
S&P also reported the county has “very strong” budget flexibility, with an available fund balance of $14 million, or 21% of operating expenditures, in fiscal year 2017, an increase from 2015’s $11.2 million, or 12.7%. In addition, the agency noted Mahoning County’s total available cash is 67.2% of its total fund expenditures and 25.3 times its governmental debt service.
The county’s debt and contingent liability profile was also graded as very strong as net direct debt was 22.4% of total fund revenue and overall net debt is 1.6% of market value.
The chief hindrance to the county, Standard & Poor’s found, was a weak regional economy which is “likely to constrain it from further upward rating movement.” The agency found a projected per capita effective buying income of $51,048, while also noting a declining, aging population down 4% to 229,956 since the 2010 census and a stable base of large employers, led by Mercy Health (1,600 employees), the county (1,700), Steward Health Care (1,600) and Youngstown State University (1,200).
“We understand that there are significant investments ongoing across the county that are expected to add jobs and continue to provide economic stability,” the report said. “The county is also expecting further growth in agriculture and mining, fracking, aluminum and food processing.”
Copyright 2022 The Business Journal, Youngstown, Ohio.