Moody’s Investors Service has downgraded Nye County’s limited-tax general obligation debt to A3 from A1, affecting $28.47 million of outstanding bonds.
The two-notch drop came as a result of the region’s severe recession and weak real estate market. That has caused substantial tax base declines, Moody’s said.
Nye County’s assessed valuations declined by 11.8% in fiscal 2011 and 28.6% in 2012 due to increased foreclosures and declining median home prices. As of June, the county’s unemployment rate of 16.7% remains high compared to both the state and national medians at 13.5% and 9.3%, respectively.
Significant multi-year revenue declines have outpaced the county’s efforts to cut spending, resulting in large operating deficits in recent years.
Nye received an A3 rating based on expectations that while additional budgetary pressures should remain through fiscal 2012 and possibly fiscal 2013, the county’s prospects for improved financial stability should increasingly take hold as the national and regional economic picture improves, according to the report.
The GO bonds, secured by the county’s operating levy, also benefit from an additional security pledge of 15% of the county’s consolidated tax.
Located west of Las Vegas, Nye County has a sizeable tax base and a manageable debt burden, the rating agency said. About 90% of the county’s nearly 18,200 square miles is federally owned, comprising the Department of Energy’s Nevada Test Site, the Nellis AFB Bombing and Gunnery Range, and several national wildlife ranges and forests.