St. Clair County maintained its good bond ratings through two agencies, even though one agency warned of “weak budget performance” because of planned deficits.
The county needed to go through the bond rating process because it plans to restructure debt associated with the construction and equipping of Mid-America Airport. In March, the County Board authorized restructuring $39.8 million in bonds as it faces, along with other municipalities, a cut in state income tax transfers through the Local Government Distributive Fund.
Money to pay back the airport debt is set to come from passenger facility charges, grants from the federal government, revenues that come from the operation of the airport and related facilities, and from the county’s income tax transfers distributed from the state.
In its analysis, Standard & Poor’s said the county had a weak budgetary performance as it ran a 8.9 percent deficit in its general operating fund, and 10.1 percent deficit across all of its funds during the 2013 fiscal year.
In 2014, St. Clair had a $1 million general fund budget shortfall, after transfers, budgetary adjustments and $5 million is bond proceeds.
During this fiscal year, the county does have a $1.295 million shortfall planned, according to the S&P analysis.
“It is the county’s practice to annually support the airport enterprise fund with general fund transfers to MidAmerica to support operations, primarily for fixed overhead expenses,” Standard & Poor’s wrote.
The airport received $6.8 million in interfund transfers in 2013, and $5.6 million in 2012, according to the S&P report.
Despite the weak budgetary assessment, S&P said the county had strong financial flexibility.
As of the 2013 fiscal year, the county’s reserves represented 102 percent of operating expenses, or about $44 million.
“We expect the available fund balance will remain above 75 percent of expenditures for the current and next fiscal years, which we view as a positive credit factor,” the Standard & Poor’s report said.
S&P also gave St. Clair County a stable outlook.
“The stable outlook reflects our expectation that the ratings will not change within a two-year horizon because we believe the county will take steps necessary to maintain its very strong financial flexibility and liquidity,” the S&P analysis said.
Moody’s said the county could improve its rating by expanding the tax base and reducing the amount of money needed to support airport operations.
“The county's ... rating reflects the county's sizable and growing tax base anchored by Scott Air Force base, below average wealth indices, strong financial position supported by ample reserves, and manageable debt profile characterized by a modest debt burden and amortization that is further weakened by the current restructuring,” Moody’s said in its rating rationale.
The bond sale is expected to take place in June, according to the Moody’s release.
St. Clair County’s rating is good news, compared to the state’s rating, A3 negative according to Moody’s, and Chicago’s recent junk rating status.
“Chairman (Mark) Kern has exercised sound fiscal policy and this body, the board, has supported his direction, (which) results us in being in a position the largest city in the state isn’t in ..., nor is the state in our position in terms of our rating,” said Interim Director of Administration Debra Moore. “Chicago has pension contribution issues that we don’t have. It really says a lot for St. Clair County.”