DALLAS — Reagan County is the latest small, rural West Texas county to receive an upgrade of its credit from Standard & Poor’s that’s attributable to increased oil and gas drilling in the Permian Basin.
Analysts raised the county’s underlying rating to BBB-plus from BBB, citing the maintenance of solid reserves and assessed-value gains. Although a moderating tax rate, high average debt burden, and minimal capital requirements mitigate the credit’s strengths.
Reagan County’s fiscal 2007 general-fund balance of $4 million is roughly three times higher than 2001 due to increased property-tax revenue from growth in the oil and gas industry. The county’s assessed value averaged 24% annual growth to $1.4 billion for fiscal 2008 from $473 million in 2003, according to analysts.
“And our last certified value came before oil hit $100 a barrel, too, so we may be even higher than that,” said county auditor Cathy Sellman. “Anytime oil’s up, we’ve got plenty of money and oil’s up … way up.”
The upgrade applies to $4 million of debt outstanding for the county, which is home to just about 3,300 people, and Sellman said there are no plans to issue additional debt anytime soon. The last debt sale by the county was about $2.2 million of certificates of obligation in 2000 for an expansion of the county jail.
“We believe county officials will maintain the county’s solid financial position, including healthy reserves, which should help mitigate, in part, employment and property tax base concentration and the energy sector’s cyclical nature,” said Standard & Poor’s analyst Brian Marshall. “We also think management will maintain average debt burden.”
Earlier this month, Standard & Poor’s raised the credit of Potter County in the Texas panhandle to AA from AA-minus and bumped Tom Green County up two notches to AA-minus from A.
Tom Green County is about 60 miles east of Reagan County in West Texas.
Tom Green County’s current taxable-assessed value has increased 37% the past five years to $3.7 billion from $2.7 billion in 2003, and Potter County’s property tax base averaged 5.3% annual growth the past five years to $5.8 billion, according to analysts.
While Potter County, with more than 122,000 residents, and Tom Green County, with about 105,000, have growing populations, Reagan County has been losing people this decade despite the recent uptick in oil and gas production in the area.
