By Hillary Gavan
Rock County has received excellent credit ratings from Standard & Poor (S&P) and Moody's.
S & P assigned the county its AA rating and Moody's assigned it a Aa1 rating, the same ratings assigned back in May of 2010. Typically AAA is the highest rating and D is the lowest. Bond ratings are a measure of the quality and safety of a bond, based on the issuer's financial condition and its ability to pay back the debt on capital improvement projects, according to Rock County Economic Development Manager James Otterstein.
The better a bond rating is, the lower the interest rate the county will have to pay for any money it borrows. These lower interest rates lead to less debt service. And lower debt service means a lower cost to Rock County, which translates into less taxes taken from residents to pay interest.
Otterstein said the high bond rating also sends a positive signal out into the marketplace. The credit ratings took into account the County's financial management practices, as well as a host of economic indicators.
S & P assigned its AA rating, with a stable outlook, taking into account Rock County's diversifying economic base with a decreasing reliance on manufacturing employment, positive economic indicators, a strong fund balance and moderate debt. These credit rating reports are posted online, at the Rock County Development Alliance Web site (www.rockcountyalliance.com), within the "Demographic & Economic Data" section.
According to 2010 U.S. Census data, the Rock County population was 160,331, a 5.3 percent increase since the 2000 U.S. Census. Beloit has a A+/stable rating and Janesville has a AA-/stable rating.
Median home value in the county is $132,488, or 78 percent of the national level. The property tax base was, in S&P's view, very diverse.
The credit report also listed the various major employers doing well; Mercy Health System (3,687 employees); Beloit Health System (1,486); Janesville School District (1,368); Rock County (1,171); and Hendricks Holdings (857); Beloit School District (849); and GHC Specialty Brands (843).
In September, Moody's Investors Services assigned an Aa1 rating to Rock County's $4.5 million general obligation promissory notes.
Moody's report noted Rock County has a sizable tax base that has built up and maintained healthy general fund liquidity. The challenges are tax base valuation declines and reductions in state aid revenues. Moody's Wisconsin ratings for both school districts and units of government are available at http://wisconsin.municipalbonds.com/bonds/moodys_reports.
According to Moody's, General Motors (GM) officially closed its Janesville plant in 2008, affecting approximately 2,400 employees. As a result of the plant's closure, GM is no longer one of the county's top taxpayers and the plant's valuation changes should have little impact on the county's tax base going forward.
Although the local economy has historically been dominated by GM, plant down sizing occurring over the last few decades has provided opportunities for diversification in the county's tax base as evidenced by expansion of major taxpayers including Hendricks Holdings, the county's largest taxpayer which accounts for 0.7 percent of 2010 assessed valuation.
Hendricks recently acquired Bradco Supply Corp. and now is one of the largest wholesale distributors of siding, windows, and other select exterior building products with combined sales of over $4 billion. Additionally, Kerry Ingredients, the second largest taxpayer which accounts for 0.5 percent of 2010 assessed valuation announced several investments throughout Wisconsin totaling $20 million, of which nearly $8 million will be allocated toward its Beloit Customer Center. The new reconfigured office and lab space will add approximately forty-seven new positions.
Due to the economic downturn and the GM closure and reassessment, the county's tax base began declining in 2009. Despite the recent declines, officials expect the full valuation to flatten with modest growth in the near term due to the stabilization of residential property valuations and continued commercial growth.
The county's June 2011 unemployment rate of 10.1 percent was above the state and national level of 8.1 percent and 9.3 percent, for the same period.
Officials originally budgeted for balanced operations in fiscal year 2011 but unaudited year to date results indicate a slight surplus. Looking ahead to fiscal 2012, the county anticipates a reduction in state aid revenues totaling $2.9 million as a result of the state budget repair bill.
However, the county anticipates that available savings from the pension and health care provisions of the state budget bill will offset the reductions in aid, as the county projects $2.7 million in savings.
In 2007 the county implemented a 0.5 percent sales tax that will be used primarily to support capital projects and to offset the application of General Fund reserves to support operations in the future.
The county budgeted for $9.4 million in sales tax revenues in 2011, while it actually received $9.6 million in 2010 and year to date trends indicate higher than budgeted results can be expected for 2011.