Mt Pleasant News
https://mt-pleasant-ia.villagesoup.com/p/1735628

Wash Journal   Fairfield Ledger
Neighbors Growing Together | Aug 22, 2018

HC economy given ‘stable outlook’ by S&P Global Ratings

Rating could potentially save the county $300,000 in interest
Mar 28, 2018

By Grace King, Mt. Pleasant News

 

Jeff Heil, of S&P Global Ratings, is encouraged by Henry County’s AA- credit rating, which puts a “stable” outlook to Henry County, citing adequate management and budgetary performance.

Although County Auditor Shelly Barber was slightly miffed when she received the rating, Heil assured that for a county this size, it was better than he was hoping for, with the chance to save upward of $300,000 on interest in the jail project.

“The report came back on the higher end of my expectations,” Heil said during the Board of Supervisors meeting on Tuesday, March 27. As the county moves forward in approving 2018 general obligation capital loan notes and looks toward construction bids for the jail project, supervisors opted to have the county rated by S&P Global Ratings for just that purpose.

The report looks at four categories — the economy, budget performance, liquidity and debt — to determine a rating.

The report said that Henry County is considered to have a weak economy, Heil explained that that was compared to the U.S. as a whole. Henry County has fewer employers and is a smaller county compared to others.

Other factors taken into account to give Henry County the label of weak economy include the projected per capita effective buying income, which is 87 percent of the national level and per capita market value of $72,281. Overall, the market value has grown by 3.3 percent over the past year to $1.5 billion in fiscal year 2019. The county’s unemployment rate was 3.6 percent in 2016.

Henry County is said to have adequate management. Heil said that with many smaller counties he works with, they don’t have the staff to directly work on budget or finances of the county and that might give them a “weak” management. However, Henry County’s management is adequate with standard financial policies and practices in key areas.

These are realistic assumptions when setting the annual budget; monthly monitoring of the budget by Board of Supervisors; lack of formal long-term financial projections; lack of a formal comprehensive, long-term capital plan, but each department keeps an informal capital plan; adherence to state guidelines regarding investments; lack of formal debt-management policy; and lack of a formal fund-balance policy, but the informal policy is to maintain reserves at 12 percent of expenditures for cash-flow purposes.

Henry County’s budgetary performance is also adequate, with the county having balanced operating results in the general fund of 0 percent of expenditures. However, the report said the county had a deficit result across all governmental funds of 4.3 percent of expenditures in fiscal 2017.

The report projected that budgetary performance for fiscal year 2019, which begins in July, will likely remain adequate.

In the other categories of budgetary flexibility and liquidity, the county walked away “very strong.”

“Things look stable,” Heil said.

The report said the budgetary flexibility is very strong with an available fund balance in fiscal 2017 of 49 percent of operating expenditures, which is $3.2 million. The available fund balance will likely remain somewhat level in fiscal year 2018 because midyear capital purchases were not reported as major expenditures.

Henry County’s liquidity is strong with total government available cash at 60.9 percent of total-government-fund expenditures. According to the report, the county has strong access to external liquidity if necessary.

Heil said that if things weaken in Henry County’s economy, it could downgrade at any time. On the up side, with counties of this size, it’s common to have informal policies on budget, balance projections and long-term capital needs that Henry County has. However, Heil said that more formalized policies could cause the county to be upgraded to a higher scale.

Overall, this is “good news to report as we look at the days ahead to get construction bids,” Heil said, referring to construction bids for the jail project. “Hopefully those will come in under what we estimate and that will save some more funds.”

In other news, County Engineer Jake Hotchkiss said they are waiting for the weather to dry up after the heavy rains this weekend before they can continue with the grading project on 140th and Dakota Ave.

Hotchkiss said that territory operators will finish crack filling for spring this week and move onto spot hauling rock. As the weather continues to improve, they will start resurfacing projects.

“So far, the roads are holding up pretty well,” Hotchkiss said. “This weekend made it messy again, so we need a day or two for it to dry up.

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