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County retains strong bond rating
Outlook for 2011 less rosy
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2009 Newton County per capita income:

$19,317; 8.7 percent lower than state average

2009 Newton County median family income: $49,748; 0.9 percent higher than state average

Moody’s Municipal Long-Term Debt Ratings

Aaa –

issuers demonstrate the strongest creditworthiness compared to other governments

Aa(1,2 or 3) –

issuers demonstrate very strong creditworthiness compared to other governments

A –

issuers demonstrate above-average creditworthiness relative to other governments

Newton County’s strong bond rating did not drop this year, despite declining property tax values, but Moody’s Investors Services was less certain the rating would hold in 2011.

The county retained its Aa2 bond rating, the third-highest rating Moody’s gives governments, but Moody changed its outlook for the county from neutral to negative in a November review. The bond rating affects the county’s interest rates on loans and the rates charged to municipalities and entities such as the hospital, County Chairman Kathy Morgan said Thursday. The county has $10.8 million of debt rated at the Aa2 level.

"The Aa2 rating additionally reflects the expectation that the county’s sizeable $8.2 billion tax base (as of tax year 2009) will see further declines as a result of the economy," according to Moody’s report. "Building permits have seen considerable decrease since 2007, and there is no timetable as to when the trend will reverse."

A cause for concern is the county’s low fund balance, or reserve account. The fund balance is $4.4 million, or 7 percent of General Fund revenues. Morgan said the county should have a fund balance of at least 15 percent, or enough to cover two months of operating expenses.

Moody’s said that the 7-percent fund balance is lower than what’s found in other Aa2 rated counties in Georgia and across the U.S. Morgan said she will seek to convince commissioners to increase the fund balance. Newton County had a fund balance of more than 20 percent as recently as fiscal year 2007, but the county is unlikely to reach its goal in fiscal year 2011.

Moody’s noted that the county has been willing to cut its budget and raise the millage rate. "It remains to be seen whether management’s efforts to restore structural balance will overcome the effects of declining property values," the report states.

The Board of Commissioners will discuss the report at 7 p.m. Tuesday at the Historic Courthouse.