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Last updateThu, 19 Nov 2015 8pm

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S&P upgrades King George’s financial ratings to ‘AA+’

The King George Board of Supervisors got good news last week from Travis Quesenberry, county administrator, who informed them that the financial rating agency Standard & Poor’s has upgraded the county’s bond rating again.

The county’s rating has gone up from ‘AA’ to ‘AA+.’

The news was provided at the meeting on June 24, with a credit profile document by S&P distributed by Quesenberry dated the day before.

The release from S&P indicated the county’s long term rating was revised to ‘Stable.’

In addition, the S&P upgrades included the King George Economic Development Authority’s (EDA) lease revenue bonds from ‘AA-’ to ‘AA’

Quesenberry provided the news as part of his meeting report, saying, “I think this is very good news for King George County.”

Two supervisors commented on the news.

Chairman Joe Grzeika told Quesenberry, “I think you understate the importance of this. These upgrades are critical for our taxpayers and a demonstration of how this county is run and managed.”

Grzeika went on to note the details in the assessment, adding, “They dig into things. Robyn (Shugart, director of finance) has to go through a number of questions and responses they ask for. They have a call with the county administrator, the chairman and the finance director to go through and quiz us on how we’re doing, what we’re doing and where we’re going.”

He added, “I think it speaks volumes because here’s a third party with no reason to want to upgrade us. And to do that in this economy, I just think – to our staff and the folks that are maintaining the business, and to the board for having the wherewithal and understanding to make those sometimes tough decisions, but for the right reason and to do the right things. It makes a difference. And this just validates those things. I think we should be very, very proud of these – having two in one year is amazing.”

It was only five months ago that Supervisors got the news that Fitch Ratings had upgraded the county’s bond rating from ‘AA-’ to ‘AA.’ That news was provided at the meeting earlier this year on Feb. 24.

Supervisor Dale Sisson also commented, saying, “It might be worth pointing out a couple of sentences in the outlook, which is where the rating agency provides its long term projection. It says, ‘The stable outlook reflects our view of King George’s strong finances supported by a strong economy and financial management policies.’”

Sisson added, “They are even talking about stability with the possibility of seeing an improvement in the rating above AA+. For a rural county in the United States, that’s a pretty big deal.”

Grzeika agreed, adding, “At 25,000 people. I’ve looked and there’s not a whole lot of counties at 25,000 people that have their own individual ratings. That’s not a given, that’s not a requirement. So, I think it’s significant.”

The S&P Ratings Services summary document provided a review of the following credit factors responsible for the upgrade.

STRONG LOCAL ECONOMY
It says a strong local economy is “anchored by the Dahlgren Naval Surface Warfare Center.” It notes the base is the county’s largest employer, with 5,000 civilian and military personnel and 4,000 contract employees. It relates, “Dahlgren did not experience any reductions due to sequestration or the federal government shutdown in 2013.”
In addition, the report adds that the demand for contract work is “steady or increasing.” County unemployment averaged 6.3 percent in 2013.

BUDGET FLEXIBILITY
The report notes the county has “very strong budgetary flexibility with available general fund reserves.” The county has committed revenue stabilization reserves totaling $18.5 million at the end of fiscal year 2013.
The county maintains flexibility in its capital projects fund, supported by annual landfill revenue, with an additional $9.2 million of committed fund balance at the end of 2012-13. A small surplus is projected for the end of the current fiscal year, of about $80,000, that would add to the fund balance. In addition, the 2015 budget includes $400,000 for one-time capital costs.

BUDGETARY PERFORMANCE
The report cites “strong budgetary performance” for fiscal year 2013. It notes adjustment for a one-time encumbrance for costs to bring a gas transmission line to the industrial park and for bond-funded capital expenditures in the capital projects fund. During that year, the report notes the county ended up with a total government funds surplus of $427,000, equal to 1-percent of expenditures.

LIQUIDITY
S&P cites King George’s “very strong liquidity” with cash reserves equal to 92 percent of total government expenditures and more than six times governmental debt service.  

MANAGEMENT
The financial ratings report cites King George’s “very strong management conditions,” saying it has “strong policies and practices in place” pursuant to S&P’s financial management criteria, saying the “strong” indicator reflects the practices the county has in place are “strong, well-embedded and likely sustainable.”

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