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County’s S&P bond rating solid

September 8, 2012
By JOHN PEPIN - Journal Staff Writer (jpepin@miningjournal.net) , The Mining Journal

MARQUETTE - In a recent report, Standard and Poors Ratings Services reaffirmed Marquette County's bonding rating at "AA-" and forecast the county's financial outlook for the next two years as stable.

The county has maintained the rating since 2009, when the county made a four-step improvement from a rating of ""BBB+" to "AA-" based on "solid financial performance." The rating service makes its determination based on a range of financial factors. A rating of "AAA" is the highest possible, a "D" is the worst.

The improved rating makes the county eligible for more attractive interest rates, should it ever decide to issue bonds.

In the most recent Standard and Poors evaluation, the Chicago firm's officials said the rating reflects their view of the county's:

- Local area economy primarily revolving around tourism and mining

- Very strong market value per capita supported by a growing tax base

- Very strong general fund position bolstered by additional reserves in the delinquent tax fund

- Low debt burden

Those strengths were offset by:

- The county's below average, albeit adequate, income levels

- Large unfunded liabilities for pension and health care

"In our view, the county's financial position is strong, bolstered by consecutive operating surpluses over the past several years and we expect it to remain strong based on management's expectation of balanced operations for fiscal years 2012 and 2013," the report summary stated. "Management attributes the historical surpluses to conservative budgeting practices, health insurance savings and increasing property tax revenues due to tax base growth."

Marquette County contributes to the Municipal Employees Retirement System of Michigan for pension benefits, contributing $3.1 million for fiscal 2011. That figure is 10 percent of total governmental funds expended. The county reported an unfunded actuarial accrued liability of $25.4 million to MERS. The county also administers a single-employer defined benefit health care plan for other postemployment benefits and contributed $2 million, or 6 percent of total governmental funds expenditures in fiscal 2011. As of Dec. 31, 2008, the county's unfunded actuarial accrued liability toward the health care plan was $54.2 million.

"Management informs us that it has been addressing its unfunded liabilities by making contract changes to the number of employees covered and benefits offered," the report stated. "The county has also been setting aside additional funds in anticipation of future OPEB liabilities. As of fiscal 2011, the county had reserved $1 million for future OPEB liabilities and expects to set aside additional funds in 2012 and 2013."

Other statistics on the county cited by the report included:

- As of May, the county's unemployment rate was 7.3 percent, below state and national levels.

- County income levels remain only adequate with the median household effective buying income at 84 percent of the national level.

- The county's taxable value has grown by 5 percent annually over the past five years to $2.16 billion this year.

- Estimated market value has increased an annual rate of 4 percent since 2007 to $5.63 billion, or $85,808 per capita, which was considered "very strong."

- Diverse tax base, with the 10 leading taxpayers accounting for 10 percent of 2011 total taxable value.

- The county's general fund balance increased by $538,000 in fiscal year 2011 to $4.9 million.

- The county's overall debt burden is low at $975 per capita and 1.1 percent of estimated market value.

- Including the unfunded actuarial accrued liabilities for pension and health care, the county's debt burden increases to a moderate $2,188 per capita and a low 2.6 percent of estimated market value.

John Pepin can be reached at 906-228-2500, ext. 206. His email address is jpepin@miningjournal.net.

 
 

 

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