OREANDA-NEWS. Fitch Ratings assigns an 'A+' rating to the following Oneida County, New York (the county) general obligations (GO):

--\$21,600,000 public improvement (serial) bonds, 2015.

The public improvement bonds are expected to sell competitively the week of May 4.

Additionally, Fitch affirms the 'A+' rating on \$136.7 million county GO bonds.

The Rating Outlook is Stable.

SECURITY

The current offering and bonds issued after 2010 are payable from the county's full faith and credit and taxing power, subject to a 2011 state statute limiting increases in the property tax levy to the lesser of 2% or an inflation factor (tax cap law). This limit can be overridden by a 60% vote of the county legislature.

GO bonds issued prior to 2011 are payable from the county's full faith and credit and unlimited taxing power. No exemption is made under the tax cap law for debt service on outstanding GO debt; however, the constitutionality of this provision has not been tested.

KEY RATING DRIVERS

STABILIZED FINANCIAL PROFILE: The county has recorded general fund net operating surpluses for the past three audited years and projects another for 2014. The county began receiving shared gaming revenues under a settlement with the Oneida Nation in 2014. While these revenues remain somewhat vulnerable to competition, their receipt adds a margin of flexibility to a budget subject to sizeable mandated social service costs.

STABLE, BELOW-AVERAGE ECONOMIC PROFILE: Below-average income and a stagnant population negatively influence the economic profile. However, employment trends are favorable and a substantial amount of development is underway.

MANAGEABLE LONG-TERM LIABILITIES: The county's low-to-moderate overall debt and very rapid payout remains a credit strength. Carrying costs for debt in addition to long-term liabilities related to pension and other post-employment benefits (OPEB) are very manageable.

TAX LEVY LIMIT: Bond issued after 2010 are rated on parity with outstanding GO debt because the county may exceed the tax cap in any one year with 60% approval of the county legislature.

RATING SENSITIVITIES

STABLE FINANCIAL OPERATIONS: The county's ability to maintain positive financial performance and adequate reserves while incorporating conservative use of gaming revenues will continue to be key to future credit quality assessment.

CREDIT PROFILE

Oneida is located in central upstate New York in the area commonly known as the Mohawk Valley and is home to the cities of Utica and Rome. The county's historical population out-migration trend has moderated, with the estimated 2012 population of 234,287 essentially unchanged from the 2000 Census.

MANDATED COSTS DRIVE SPENDING

Oneida County's finances remain challenged by a high and growing state-mandated social service burden, similar to many upstate New York counties. Nonetheless, the county has demonstrated its ability to control costs and routinely underspends its budget. Potential federal and state aid reductions and limitations on revenue raising are also a concern. Positively, growth in Medicaid spending will shift to the state through 2015 providing a small measure of mandate cost relief.

STABILIZED FINANCIAL PROFILE

The county's financial performance has been positive post-recession, with general fund net operating surpluses since 2011 allowing for rebuilt reserves and maintenance of taxing margin. The county derives its general fund operating revenues from a mix of sources, including sales taxes, property taxes, state and federal revenue. Property tax levy increases are limited by 2011 state legislation to the lesser of 2% or a consumer price inflator, which can be overruled by a 60% vote of the county's legislature.

The general fund reported a \$1.7 million net operating surplus (0.5% of spending) in 2013, despite an \$8 million modified budget appropriation of fund balance. Preliminary unaudited figures for 2014 show the county generated a net operating surplus of \$5 million (1.5% of spending), far exceeding the adopted budget's \$4.4 million operating deficit. Positive budgetary performance was aided by under-budget spending as well as the receipt of \$12 million (net) unbudgeted gaming revenues.

The county's unrestricted general fund balance is expected to fall slightly from 5.8% of spending in 2013 to 4.6% in 2015, but fund balance allocations may change before the audit is finalized. The county's \$12.5 million reserve for fiscal stabilization is excluded from the unrestricted balance, but Fitch views this as an available resource equivalent to another 3.6% of spending.

Going forward, net gaming revenues will comprise a small portion of overall revenues and are budgeted at \$13 million for 2015, with \$5 million of this allotted for discretionary items and \$8 million for general operations. The 2015 budget appropriates \$4.4 million of assigned general fund balance (similar to the 2014 budget) and includes conservative revenue and spending estimates. The budget also includes the \$5.6 million prepayment of amortized pension costs payable from restricted 2014 general fund balance.

STABLE, BELOW-AVERAGE ECONOMIC PROFILE

The county's real estate market weathered the national housing downturn well. Assessed valuation continues to grow modestly as a result of continued development and local revaluations. Consistent with the upstate New York region, median household income levels in the county remain below average at 84% and 92% of state and national averages. Market value per capita is weak at \$44,000.

The county's unemployment rate declined to 6.3% in February 2015, from 7.5% year prior, driven by employment gains outpacing modest growth in the labor force. The unemployment rate is on par with the state and slightly above the national averages.

The services sector remains a major contributor to the county's employment base. The Oneida Nation's Turning Stone Casino, MetLife, Bank of New York Mellon, and Mohawk Valley Network, a major medical facility, as well as other health care and social service providers are major employers within the county.

Griffiss Business and Technology Park (Griffiss Park) is a 3,500 acre multi-use business, technology, and industrial park located at the site of the former Griffiss Air Force Base which continues to attract new investment. Griffiss Park is home to numerous air force and defense research firms as well as several manufacturing firms. A portion of the current issue provides funding toward upgrades of the Griffiss International Airport, which recently received a joint grant to support study and tracking of unmanned aircraft. Additional nanotechonolgy and State University of New York partnerships should continue to aid economic growth in the local economy.

LOW DEBT AND LONG-TERM LIABILITIES

The county's debt profile is a credit positive. Overall debt is low at \$1,441 per capita but more moderate when measured against the tax base at 3.3% of market value. Amortization is very rapid, with 83% retired in 10 years.

The county's current six-year capital improvement plan (CIP) envisions a manageable \$126 million of general government improvements (excluding utilities), of which \$85 million will be bond-funded. The county's sewer district is under a consent order from the state. The county has authorized a sizeable \$180.8 million of bonding, of which \$14.1 million has been issued, to fund the necessary improvements. The county intends to repay these obligations from the proceeds of a sewer user fee, implemented in 2011 for this purpose.

The county is also contingently liable for deficits as well as repayment of \$36 million of debt related to the Oneida-Herkimer Solid Waste Management Authority (rated 'A', Stable Outlook), although no support has been necessary thus far. The obligation to repay the debt is joint and several with Herkimer County.

The county participates in state-run cost-sharing defined benefit pension plans which are well-funded under the aggregate cost valuation method. The county opted into the state pension payment cost-smoothing plan which provided some near-term budget relief but could make future-year budgeting for these payments more challenging. Favorably, the county has prepaid much of its amortized liability; only \$8.58 million of the \$27.9 million remains to be amortized.

As of Dec. 31, 2013, the county's OPEB liability totaled \$76 million, up from years prior due to actuarial corrections, but was a very low 0.01% of market value. Carrying costs for debt service, pension, and OPEB would consume a low 10.3% of spending, assuming the full pension ARC.