OREANDA-NEWS. Fitch Ratings assigns the following ratings to the Town of Trumbull, Connecticut (the town) general obligation (GO) bonds and bond anticipation notes (BANs):

--$7,500,000 GO bonds, issue of 2015 'AA+';
--$9,520,000 GO BANs, due Sept. 1, 2016 'F1+'.

The GO bonds will permanently finance maturing BANs originally issued to finance various town projects and to fund a new project. The BAN proceeds will be used to finance various school and public improvement projects.

Fitch also affirms the following ratings:

--$145 million GO bonds at 'AA+';
--$9.9 million GO BANs due Sept. 4, 2015 at 'F1+'.

The Rating Outlook is Stable.

SECURITY

The GO bonds and BANs are a general obligation of the town backed by its full faith and credit and unlimited taxing power.

KEY RATING DRIVERS

GENERALLY SOUND FINANCIAL MANAGEMENT: Generally conservative budgeting and steady moderate tax rate increases have allowed revenues to keep pace with spending growth. Reserves have been steadily maintained at or near the town's informal 10% policy.

PENSION PROGRESS: The town has made important pension progress by budgeting for full funding of actuarially-based required contributions and implementing benefit structure changes to curtail the growth of this liability.

MODERATE LONG-TERM LIABILITIES: The cost of servicing retiree benefits and debt service consumes a moderate portion of general government expenditures. Key debt metrics are also moderate and amortization is rapid. Capital needs are manageable.

AFFLUENT RESIDENTIAL TAX BASE: The bulk of operating revenues are derived from property taxes from a predominantly residential and very affluent tax base. The town is situated in relatively close proximity to several larger labor markets, and unemployment is consistently below that of the state and nation.

LINK TO LONG-TERM RATING: The 'F1+' rating on the BANs corresponds to the long-term rating on the town's GO bonds.

RATING SENSITIVITIES

RATING SENSITIVITIES
The rating is sensitive to shifts in fundamental credit characteristics, including improvement in funding of the town's retiree benefit liabilities.

CREDIT PROFILE
Trumbull spans an area of 23.5 miles in Fairfield County situated 20-30 miles from both Stamford and New Haven and roughly 60 miles from New York City. The town is a primarily residential community and continues to grow at a moderate pace with a 2013 population of 36,571.

STRONG RESOURCE BASE
The town benefits from a strong tax base registering an estimated $6.5 billion of market value for the fiscal 2016 levy or a very high $177,000 per capita. Residential real property accounts for 69% of the tax base. Home prices have exhibited modest improvement from the recessionary low, but median home prices as reported by Zillow and Trulia are considerably higher than the state. Median household income in Trumbull of $108,667 is equal to 156% and 205% of the Connecticut and U.S. medians, respectively. The largest tax payer is the Trumbull Shopping Center (a moderate 4.4%) and tax collections average a strong 98%-99%.

PROXIMITY TO AREA EMPLOYMENT CENTERS A POSITIVE
The town's largely residential character is complimented by its proximity to somewhat larger employment centers throughout Fairfield County including Fairfield, Bridgeport, Stamford, and New Haven. Town residents exhibit a relatively high degree of educational attainment with 22.8% holding a graduate or professional degree which is 141% of the state norm. The town's unemployment rate has consistently registered below that of the county, state, and U.S. and was reported at 4.7% for May 2015.

GENERALLY SOUND OPERATING TRACK RECORD, ADEQUATE RESERVES
Absence of taxing limits and a general willingness to adjust the millage as needed affords the town strong financial flexibility. Historical financial operations have been fairly steady. Operating surpluses were recorded in four of the past five fiscal years. Fiscal 2014 closed with a $2 million operating deficit (1.2% of spending) that was largely budgeted to provide tax relief. Settlement of a tax appeal also contributed to the operating deficit. The town's unrestricted fund balance position of $17.1 million is 9.8% of spending. The town has an informal policy to maintain reserves at 10% of budgeted spending.

The town is projecting a $554 thousand general fund operating surplus for fiscal 2015 (year ending June 30). The town adopted a $156.8 million budget (2.2% increase) for fiscal year 2016 that does not appropriate any portion of the existing fund balance.

Reserves are not particularly high but satisfactory considering the town's sound financial management and the stability of its revenue structure and year-to-year performance. The town generally budgets conservatively and has demonstrated willingness to increase property taxes to keep pace with spending growth driven by higher pension contributions and debt service. The annual tax rate increases have been approximately 2% supplementing the fairly nominal tax base growth of recent years (1.1% and .01% in fiscal year 2015 and 2016, respectively). Property taxes are the dominant funding source for the general fund accounting for a very high 92% of budgeted revenue in fiscal year 2016.

IMPROVING PENSION POSITION
For many years the town underfunded its required pension contribution, but beginning in fiscal 2014 the general employee plan actuarial required contribution was fully funded and the 2016 budget fully funds the contributions for both the general employee and police town administered plans. The town is considering adoption of a charter revision to strengthen the commitment to full funding of pension contributions; Fitch considers this a positive credit factor.

As of July 1, 2014 the Fitch adjusted funded ratios (assuming a 7% investment rate of return) for the police and general employee pension plans were just 65% and 33% funded, respectively, and a low 48% on a combined basis. While funding levels are low the combined adjusted unfunded actuarial accrued liability (UAAL) is an estimated $73.9 million, which Fitch does not consider high at the equivalent of 1% of market value. The funded ratio and the UAAL improved from the prior year.

The plans are closed to new entrants and new employees enroll in a defined contribution plan to which the town contributes 7% of salary. With the plans closed, and full funding of annual contributions, the funded ratios of the defined benefit plans are expected to continue improve.

MODERATE DEBT BURDEN AND FUTURE CAPITAL NEEDS
Fitch views the town's debt metrics as moderate overall, estimated at 1.9% of market value or $3,310 per capita, net of school construction grants and sewer assessments receivable. The town repays a very high 74% of its outstanding principal within 10 years. Despite the rapid amortization of debt the town's general government debt service consumes a low 6.5% of fiscal 2015 government spending. A descending debt structure also allows the town good flexibility to address future capital needs, which Fitch considers modest. The town anticipates issuing about $7 million in debt per year. The fiscal 2015 to 2019 capital program totals $96.3 million, with the remainder of non-debt funding coming largely from grants.