Pleasant surprise: Moody's upgrades county's bond rating a tick

Published Date

LACONIA — Contrary to expectations, Moody's Investors Service has upgraded the rating on Belknap County's $9.7-million outstanding debt, including the debt of Gunstock Area Commission, by affirming the Aa2 rating and removing a "negative outlook" previosly cited.
Moody's notes that "the Aa2 rating reflects a satisfactory financial position that will remain pressured over the near term" and "a sizable tax base supported by year-round tourism and a minimal debt burden." The major pressures are the operating deficit of the nursing home, where expenses outrun revenues by an average of about $2.8-million annually, and the rising costs of other operating expenses.
The report observes that "the county has managed to constrain expenditure growth in recent years, but the growth rate is estimated to continue to outpace revenues." Future ratings, it, continues, will hinge on the ability of the county to balance operating budgets by increasing revenues and limiting expenditures while "maintaining current fund balance levels."
Since 2009 the county has limited increases in the amount to be raised by taxes by controlling appropriations, managing expenditures and supplementing revenues by drawing from the fund balance. In 2012, the budget was reduced by 3.9-percent and balanced with an increase of 0.2-percent in the property tax levy and an appropriation from the fund balance of $3.7-million. Although the county ended the year with $1.2-million in unexpended revenue, Moody's stresses that the surplus will not match the draw on the fund balance, which will fall to $4.6-million.
At $4.6-million the county's fund balance represents 18.4-percent of total general fund revenues, compared to an average of 32-percent for the 309 counties Moody's rates Aa2. Without prescribing a specific level of fund balance, Moody's seems to suggest an amount between 20-percent and 25-percent of general fund revenues would be appropriate.
Compared to other the 308 counties, Belknap County has a more robust tax base, with more than twice the property value per capita than the average as well as much less outstanding debt. The county carries $3.7-million in debt and the Gunstock Area Commission another $5.9-million. Debt service as a share of operating expenses is 3.1-percent compared to the average for the other counties rated Aa2 of 7.5-percent and debt per capita is a mere $63 compared to the average of $411.