Fitch Affirms Hawaii County Bond Rating
Fitch Ratings has affirmed the rating for Hawaii County’s outstanding general obligation bonds, Business Wire reported today.
Fitch affirmed the county’s rating of AA-, which was raised from A+ in 2010.
Fitch said the Rating Outlook for the county is stable, and that the county has maintained a sound financial position during the economic downturn. It achieved that through “strong management actions including spending cuts and tax rate increases,” Business Wire said.
County Finance Director Nancy Crawford said the affirmed rating, which the county sought in anticipation of future bond floats, is good news.
“We were very pleased with this rating,” she said. “It affirms that during these tough economic times we have been fiscally prudent.”
Fitch said the sound position comes despite downward pressure on revenues caused by the decline in property values, scheduled expiration of county worker furloughs at the end of the current fiscal year and “considerable increases” in pension costs.
It said after increasing a “remarkable” average of 21% per year from 2006 through 2009, property tax revenues — which make up 70 percent of the county’s income source — have since declined by 17 percent.
Other fiscal challenges the county faces include an unemployment rate of 9% (in February), which is higher than the rates nationally, statewide or those in other Hawaii counties.
It noted that Hawaii County’s overall debt is $276.7 million, with per capita debt at about $1,885, and that roughly 60% of its outstanding debt will be retired within 10 years.
Fitch said the state of Hawaii’s centralized government structure both helped and hindered the county.
On one hand it restricts its financial flexibility because government union contracts are negotiated statewide. On the other it helps by providing some funding for capital improvements on the Big Island.
The rating service noted that the county anticipates going back to the bond market this fall for various projects including $31 million for federally mandated improvements to the police radio system, $28 million for highway and street improvements and $6 million for recreational facilities.
Crawford said the total amount of bonds yet to be determined. She said some older bonds will be refinanced to take advantage of current lower interest rates.