DALLAS - Standard & Poor's has upgraded 46 Texas counties that are growing or maintaining small debt loads in a weakening economy.
The counties "have proven themselves worthy of a higher rating because of their stable financial positions and generally high reserve levels, coupled with low debt burdens and very limited capital plans," analysts wrote. "In other cases, positive trends in several key ratios led to the rating upgrades."
Denton County, north of Dallas and Tarrant counties, saw its rating rise to AAA from AA-plus. Four rural counties - Gonzales, Jack, Reagan, and Starr - moved from the BBB category to the A-category, some with two-notch upgrades. All other counties were previously rated A-minus or higher. The largest county to receive an upgrade, El Paso, population 760,000, rose one notch from AA-minus to AA.
While some of the counties were in rural areas of the state, many adjoined major urban areas. Fort Bend County near Houston rose from AA to AA-plus. Assessed value grew to $30 billion in 2007 or $60,000 per capita. The county ended the fiscal year with a general fund balance of $35.7 million, or 24.3% of expenditures.
Hays County, one of the fastest growing suburban areas south of Austin, got a boost from A-plus to AA. With the college town of San Marcos as its county seat, Hays has seen its population increase 5% annually to 140,000 as assessed value has risen 10% annually over the last seven years to $8.9 billion or $67,963 per capita.
Even faster growing Williamson County north of Austin saw its rating improve one notch to AA-plus. With a population of more than 390,000, Williamson has seen assessed value climb to $30 billion or $72,000 per capita. To keep up with growth, the county has had to maintain debt levels of 7.6% that analysts consider "moderately high."
"We expect growth, while slowing to continue, most likely not at the double-digit pace that it has recently," wrote analyst Ed McGlade.
Johnson County, population 155,900, south of Fort Worth jumped a notch from A-plus to AA based on its strong financial position and an unreserved general fund balance of $10.5 million, or 36% of expenditures, at the end of fiscal year 2007.
"While location and relative size are still important factors in our analysis, overall we believe that municipalities that lack heft and/or a favorable location, can, in fact, be as strong - or stronger in some cases - than their large, urban counterparts," analysts wrote. "The key to achieving a higher rating in our analysis is for a municipality to demonstrate what we view as stability, both economic and financial."
With the upgrade of Denton County to triple-A, there are now six counties in the state with the top rating, representing 7% of Texas's 254 rated counties. Another 38 are in the AA category (46%), and 35 are in the A category (43%). After the upgrades, only three counties have a GO debt rating below A-minus.
