HILO — Bond rating agencies have affirmed Hawaii County’s solid financial standing as the county schedules the sale of $97.2 million in bonds.
Ratings agencies Moody’s Investors Service and Fitch Ratings, in statements issued Wednesday, cited the county’s prudent financial management that enabled it to remain on firm fiscal footing during the economic downturn. Standard & Poor’s Ratings Services issued a similarly positive statement the same day, said Finance Director Nancy Crawford. The S&P rating is available only by subscription.
“They all affirmed our current ratings, which we take as a very positive sign given the current economic times,” Crawford said. “We take that as a very positive sign that we’re on the right track.”
The agencies cite the county’s past willingness to raise property taxes when needed, and note the bonds are secured by the full faith and credit of the county, including, as Moody’s describes it, “an unlimited property tax pledge.” That’s because Hawaii County, unlike some other counties in the United States, can raise its property taxes without a referendum or vote by the public.
“Management expects flat (assessed values) in fiscal 2014 and changes to property tax revenues will depend on tax rates approved as part of the budget process,” said the Fitch report.
Does that mean a property tax increase is in the offing?
Crawford said Thursday that the county certainly didn’t indicate that to credit rating agencies, but “we did not close the door on that possibility.”
In the first signal from the county administration that property values are likely to be stagnant for the 2013-14 fiscal year that starts July 1, Crawford said, “We feel like we’ve hit bottom, that we’ve reached a plateau.” Currently, however, the county is focusing on the expense side of the ledger, she said.
The Finance Department will wrap up departmental budget meetings today, and then start crafting the budget Mayor Billy Kenoi will present to the County Council on March 1. The budget is based on a preliminary property tax base. It is then finalized in early May after the property values are certified. The County Council then modifies and approves the budget and sets the property tax rates.
Taxes were last raised in 2010.
Moody’s rated the 2013 series of bonds at AA2, indicating second-highest quality and low credit risk and Fitch gave them an AA- rating, with AAA being the best possible rating.
The bonds are set to be sold through a negotiated sale next week. Almost $40 million of the proceeds is being used to pay off higher-interest 2003 and 2004 bonds, $33 million is paying off bond anticipation notes already borrowed, $9.6 million will pay off state revolving loans and $24.7 million will go toward capital projects, according to the Fitch report.
Deputy Finance Director Deanna Sako said the $24.7 million can be used for any of the projects that have been previously authorized by the County Council. Projects currently in progress or soon to begin include a renovation of Edith Kanakaole Stadium in Hilo, the Laaloa Extension in Kona and the countywide public safety radio upgrade project.
“This rating review by nationally recognized experts is a testament to our careful, conservative approach to balancing the budget in very challenging economic times” Kenoi said in a statement.