OREANDA-NEWS. Fitch Ratings assigns an 'AAA' rating to the following general obligation (GO) bonds of Carroll County, Maryland (the county):

--$37.27 million public improvement and refunding bonds of 2015.

The bonds are expected to be sold competitively on Nov. 19, 2015. Proceeds will be used to refund the series 2007 bonds and fund various capital projects.

In addition, Fitch affirms the following ratings:

--$266 million GO bonds at 'AAA'.

The Rating Outlook is Stable.

SECURITY
The bonds are payable from the county's full faith and credit taxing power, for which the county is empowered and directed to levy unlimited ad valorem taxes.

KEY RATING DRIVERS

SOUND RESERVES: Carroll County's fiscal operations are well managed through long-term financial planning and frequent monitoring of revenues and expenditures, resulting in healthy reserve levels.

STABLE ECONOMY: Low unemployment reflects the county's close proximity to major employment centers as well as growing employment opportunities within the county.

LOW DEBT BURDEN: The county's debt burden is expected to remain low given its capital needs, and pension and other post-employment benefit (OPEB) costs are manageable.

RATING SENSITIVITIES

STABLE CREDIT PROFILE: Fitch expects debt fundamentals to remain largely stable and the county to manage its finances to maintain structural balance and a healthy reserve cushion.

CREDIT PROFILE
Carroll County, located in north-central Maryland, covers 452 square miles and is within the Baltimore metropolitan area. The county, with an estimated population of around 167,830, serves as a bedroom community with approximately 55% of residents commuting to work centers outside of the county.

FAVORABLE OPERATING PERFORMANCE Fiscal 2014 operating results show a modest $673,000 (0.2% of spending) deficit, which is notably better than the $14.8 million budgeted use of fund balance. Positive variances were due to salary savings, operational spending under budget and additional miscellaneous revenues. Pay-as-you-go spending was reduced to $23 million. The year-end unrestricted general fund balance of $48.8 million was a strong 13.2% of spending.

Preliminary fiscal 2015 results indicate a modest $1.55 million deficit (0.36% of spending), again materially better than the budgeted $14.3 million use of fund balance. The estimated unrestricted general fund balance totals $46.2 million or 10.8% of estimated general fund spending.

The fiscal 2016 budget of approximately $380 million is a 3% increase over fiscal 2015; the increase is mostly due to additional school funding. The budget includes a $12.3 million general fund balance appropriation and a $2 million appropriation from the cable franchise fee fund, which is similar to prior years. The real property tax rate remains unchanged for the fourth consecutive year. Fitch believes the county will continue to maintain healthy reserve levels despite the sizable fund balance appropriation, as the county typically outperforms budget.

SIGNIFICANT FINANCIAL FLEXIBILITY
At $1.018 per $100 of assessed value the county's fiscal 2016 property tax rate is competitive within the northern Maryland area. The property tax rate and levy are not subject to limitation. The county's income tax rate (3.03% effective Jan. 1, 2015) is also competitive and below the statutory cap of 3.20%. Increasing the income tax rate to the cap would generate approximately $7 million or 2% of fiscal 2015 unaudited spending, although no such increase is presently contemplated.

RESIDENTIAL ECONOMY WITHIN BALTIMORE METRO AREA
The local economy contains a mix of manufacturing, industrial, service, and agricultural businesses. Examples of employers with headquarters or major presences in the county include Random House and Jos. A. Bank Clothiers. Additional significant employers in the county are two hospitals, two retirement communities, and two colleges.

Future economic growth prospects are favorable, which should continue to facilitate a low unemployment rate. The county's unemployment rate of 4.1% for September 2015 is comfortably below the Baltimore-Towson metro, state, and national averages. The education level of county residents compares favorably to the nation, enhancing the county's ability to attract and retain employers. Median household income is strong at 111% of the state average and 159% of the national average. The poverty rate is low at 5.3%.

The state divides the county into three assessment groups, with annual reassessments rotating each year (thereby smoothing annual volatility in tax base performance). Assessed value declined 16% between 2010 and 2015. The preliminary assessed value for 2016 shows modest growth of 0.3%, aided by an ongoing post-recession recovery in home prices. The fiscal 2015 tax base is a sizable $18.5 billion and is well diversified with no taxpayer concentration.

FAVORABLE DEBT PROFILE
Overall debt levels are low at $1,981 per capita and 1.8% of market value, and amortization is rapid at 66% in 10 years. The county's fiscal years 2016-2021 capital improvement plan totals $269 million (excluding enterprise fund projects), and the county expects to issue approximately $158 million in general obligation bonds (including this sale) over this timeframe as part of the funding scheme. The planned borrowing total approximates the amount of debt repaid during this period.

Debt service costs accounted for a manageable 9.7% of governmental spending in fiscal 2014, and debt service is expected to remain manageable given the moderate borrowing needs and rapid amortization of outstanding debt.

MODEST PENSION AND OPEB COSTS
The county provides pension benefits to its employees through the county employee pension plan, and to police officers and volunteer firefighters through the county certified law officers' pension plan and volunteer fireman pension plan; the county also contributes to the statewide pension system for teachers' normal costs. The county's pension plans are well funded and the unfunded liability is modest relative to county property values.

For fiscal 2014, pension contributions accounted for a modest 0.8% of spending (excluding normal costs for the teachers' pension plan contribution). The county also provides OPEB to its retirees. During fiscal 2014 the county contributed $10 million, 96% of the ARC. Total carrying costs (debt, pension ARC and OPEB contribution) were a manageable 13% of fiscal 2014 governmental spending. Fiscal 2015 benefit costs are slightly less than fiscal 2014 and therefore remain a manageable liability.