DuPage County Loses a Triple-A Rating

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CHICAGO — DuPage County, Illinois lost a triple-A rating because of its limited revenue flexibility and growth prospects that are now given greater weight under revised rating criteria.

Fitch Ratings Friday downgraded the county's issuer default rating and unlimited and limited tax general obligation pledges to AA-plus from AAA. The outlook is stable.

DuPage County is in the western border of Cook County, in Chicago's suburbs.

"Underlying credit factors since the time of Fitch's last review of the district are mostly stable; however, the revised criteria place increased focus on Fitch's expectations for the natural pace of revenue growth without revenue-raising measures and the ability of an entity to independently increase revenue," Fitch wrote in the report.

"The downgrade reflects Fitch's concern that the county's limited revenue flexibility and slow revenue growth prospects," analysts added. Fitch's released its revised criteria for U.S. state and local governments in April.

The county is a non-home rule unit of government that is subject to state property tax caps. Voters in the county or the state legislature must approve any increases in the sales or other tax rates.

The county is heavily reliant on economically sensitive sales taxes for 54% of revenue. Property taxes make up just 13%. While sales tax revenue has grown between 4% and 5% annually over the past several years, it slowed to only 1% in fiscal 2016.

The still high-grade rating reflects the county's fiscal strengths with a low long-term liability position.

The affluent county benefits from low unemployment and its close proximity to Chicago. It spans 332 square miles and has a population of about 934,000, a figure that has increased slightly since 2010.

It benefits from low pension liabilities and overall debt levels under 6% as a percentage of personal income. The county participates in the multi-employer Illinois Municipal Retirement Fund with payments set by statute to meet an actuarially determined rate.

Fitch expects that the county's available reserve levels as a percentage of general fund expenditures to remain at levels in line with top-rated credit. They have been at more than 32% since fiscal 2009.

The county retains triple-A ratings from Moody's Investors Service and S&P Global Ratings.

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Illinois
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