SAN FRANCISCO, Oct. 13 /PRNewswire/ -- Standard & Poor's Ratings Services
raised its rating on King County, Wash.'s approximately $1.774 billion
outstanding GO bonds to 'AAA' from 'AA+' reflecting the county's exceptional
financial management through the spectrum of economic climates. In addition,
Standard & Poor's assigned its 'SP-1+' rating to the county's $65 million
series 2005A-B BANs. The outlook is stable.
"From 2000 to 2005, King County experienced economic fluctuation; it was
also during this time period that a significant statewide property tax
limitation initiative was introduced," said Standard & Poor's credit analyst
Gabriel Petek. "In the midst of these challenges, the county has effectively
achieved ongoing structural budget balance while continuing to incrementally
increase its reserve levels in recognition of the need for financial cushion
in an environment of limited revenue flexibility," he added. "Moreover, the
county has taken steps to address potential challenges to its very strong
fiscal position. For instance, the county is facilitating the incorporation or
annexation of unincorporated-but-urban areas within its limits -- areas that
are effectively subsidized by county services under the current regime."
Proceeds of the series 2005 BANs, which are secured by a limited tax GO
pledge of the county, will provide interim financing for a series of county
capital projects. Overall debt remains moderate, at $2,834 per capita and 2.0%
of property value.
A structural challenge the county has grappled with is the pressure that
Initiative-747 (I-747) places on county finances. In 2001, Washington voters
approved I-747, which limits the growth of tax revenues to 101% of the
previous year's revenues, plus newly constructed development. Early in the
current decade, this and other limits on revenue growth combined with regular
growth in expenditures to produce a structural budget gap between recurring
revenues and expenses. In response to the loss of tax revenues from I-747, the
county budgets conservatively by assuming low growth in sales tax revenues and
by reducing expenditures. In addition, management and staff have been creative
in developing ways to make operations self-supporting and by contributing to
projects that will provide increases in revenues other than property taxes.
King County, with a population of 1.78 million, is Washington's most
populous county. One-third of county residents live in Seattle, the Pacific
Northwest's economic center. The county's economy is currently expanding with
a broad-based job growth across sectors. Job losses overall -- as well as
losses in manufacturing and high technology sectors that were particularly
impacted by the slowdown -- began tapering off and have reversed as of spring
2004. Leading employers continue to include Boeing (54,400 employees),
Microsoft (27,600), University of Washington (27,200), King County (17,000),
and the City of Seattle (10,400).
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SOURCE Standard & Poor's
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