Fitch Rates Calvert County, Maryland's GOs 'AA+'; Outlook Stable.

NEW YORK -- Fitch has assigned an 'AA+' rating to Calvert County, MD's $10.9 million general obligation (GO) consolidated public improvement bonds, 2006 series, which are scheduled for bids on April 18. Fitch also affirms the 'AA+' rating on approximately $90.7 million of outstanding GO bonds. The Rating Outlook is Stable.

The 'AA+' rating reflects Calvert County's strong financial operations aided by significant financial flexibility and fiscal management policies, low debt burden, growing economy, and prudent growth management. Previously adopted ordinances are slowing the pace of residential development, as evidenced by an estimated 9% drop in new residential building permits which should slow capital spending related to schools. The commercial component of the property tax base is growing as the retail sector expands, but utilities still account for over 11% of total assessed valuation. The local employment base is thin, with most residents commuting to jobs in the metropolitan Washington, D.C. region. The county has a history of conservative budgeting and low tax rates, which provide ample flexibility to address the potential loss of revenue.

Calvert County is located in southern Maryland, along the western shore of the Chesapeake Bay. The county borders Anne Arundel and Prince George's counties to its north and west, respectively, and is across the Patuxent River from St. Mary's and Charles counties on its southwestern shoreline. The population grew 45% in the 1990s, and is estimated at 87,900 for 2005. Per capita income levels are significantly ahead of the national level and on par with the state's high level. The January 2006 unemployment rate of 3.0% is comfortably below state and national averages and has been fairly stable since 2000. County employment has enjoyed consistent growth over the same period.

General fund reserve levels are high, and liquidity position is sound. At the close of fiscal 2005, the county's unreserved general fund balance totaled 29% of expenditures and transfers out. By policy, the county maintains an undesignated fund balance at least equal to 8% of budgeted expenditures. Budgetary flexibility is available from significant taxing capacity, pay-as-you-go capital funding, and above-average debt retirement. Fiscal 2005 ended with an $8.7 million surplus driven by strong recordation and income tax receipts and various expenditure savings. Fiscal 2006 currently in progress is projected to end with a $2.2 million surplus.

Debt levels are low and should remain so due to strict growth management. Overall debt, including that of two underlying municipalities, is equal to $1,094 per capita, or 1.15% of full market value. Debt amortization, including this issue, is rapid at 75% in 10 years. The six-year capital plan through fiscal 2012 totals $269 million, about $35 million more than the prior plan due to increased construction costs; school needs and transportation initiatives make up 74% of planned spending. County general obligation bonds account for 49% of total capital financing resources, with state funding estimated to cover 33% of the program.

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