County gets higher financial rating

By Jeff Linville -

Two different investment services have increased Surry County’s financial rating, officials learned recently.

Why should the general public care about credit opinions? “It saves money,” answered Sarah Bowen, county finance officer.

A better rating gives the county the chance for lower interest rates for borrowing money through bond issuances — such as needed school repairs or a discussed addition for the jail, all of which could come to tens of millions of dollars spent.

Limited obligation bonds are fluid, changing values on a daily basis, so it’s hard to give a simple example, Bowen explained, but the interest that the county will owe will be less.

The county Board of Commissioners received the goods news on Friday at its annual retreat, held this time at JOLO Winery and Vineyards, Pilot Mountain.

Moody’s Investors Service released its credit opinion.

“The rating on Surry County’s outstanding general obligation debt was upgraded Aa2 from Aa3 on Feb. 16, 2018, reflecting strengthened credit factors.”

Moody’s said of the county, “Management budgets prudently to maintain ample reserves. Management has achieved operating surpluses consecutively for the last five years. Fiscal 2017 closed with a $3 million surplus in the General Fund, bringing reserves to over 48 percent of revenues.

“The county’s largely rural tax base continues to grow and diversify. The county also exhibits low fixed costs, with average debt and low pension liabilities, as well as below-average wealth levels, yet low unemployment.”

Standard and Poors also lifted its opinion of the county.

“S&P Global Ratings raised its long-term rating on Surry County, N.C.’s general obligation bonds to ‘AA-’ from ‘A+’. … The outlook is stable.”

S&P mentions the county’s good financial policies and practices when developing an opinion based on its financial management methodology.

“The ending general fund balance increased $16.4 million or 79 percent since fiscal 2010 due to a multiyear trend of positive budgetary results.

“For fiscal year 2017, the ending general fund balance is $37.2 million. Of that amount, $17.2 million, or 23.5 percent of expenditures, which we consider very strong, is considered available.”

And, the opinion notes, Surry does this despite a weak local economy; the projected buying income per resident is 63.5 percent of the national average.

Moody’s stated, “The county is likely to maintain a sound financial position given management’s strong record of maintaining healthy fund balance levels in step with budgetary growth.”

“Over the past five years, the county’s full value has grown at an average rate of 1.3 percent with an estimated full value of $6.4 billion for 2018,” said Moody’s.

The two services had slightly different data in some spots, but Bowen said this could be related to how they pull out numbers. For example, one company might look at results in a calendar year, while another might go by the fiscal year that starts in July.

Moody’s said, “Property taxes accounted for 43.3 percent of revenues; sales taxes were 23.3 percent, and intergovernmental revenues accounted for 12.5 percent of revenues in fiscal 2017.”

S&P stated slightly different figures, “The primary sources of general fund revenue were property taxes (47 percent), sales taxes (20 percent), federal and state grants (20 percent) and charges for services (10 percent).”

“The stable outlook reflects our view that Surry County will maintain very strong reserves and liquidity supported by strong budgetary performance and management,” said S&P.

By Jeff Linville

Reach Jeff at 415-4692.

Reach Jeff at 415-4692.