Fitch Rates Texas $4.9B Series 2007 TRANS 'F1+'.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. assigns an 'F1+' rating to Texas's $4.9 billion tax and revenue anticipation notes Revenue Anticipation Note (RAN) A short-term municipal debt issue that will be repaid with anticipated revenues, such as sales taxes, from the project. (TRANs), series 2007. The TRANs, dated Sept. 4, 2007 and due Aug. 28, 2008, are for bid on Aug. 21 and are not callable Callable Applies mainly to convertible securities. Redeemable by the issuer before the scheduled maturity under specific conditions and at a stated price, which usually begins at a premium to par and declines annually. . The 'F1+' rating reflects sound legal protections from set-asides, good coverage for each set-aside payment, substantial borrowable resources and conservative economic and revenue assumptions. These factors offset risks associated with a sales tax sales tax, levy on the sale of goods or services, generally calculated as a percentage of the selling price, and sometimes called a purchase tax. It is usually collected in the form of an extra charge by the retailer, who remits the tax to the government. dependent revenue structure and the state assumption of increased education funding. Texas regularly uses tax and revenue anticipation note (TRANs) for cash management, with the series 2007 notes selling under a $5.1 billion fiscal 2008 authorization. While not general obligations of the state, they are payable from deposits in the sinking account in the note fund. The sinking account is derived from investment earnings and transfers from the general revenue fund. The notes represent 7.6% of fiscal 2008 revenues. Fiscal 2008 is the first full year when the state's education expenses rise to its 50% share. The projected $1 billion general revenue fund ending fiscal 2008 cash balance is 6.8% of cash flow after repayment of the notes and funding $5.5 billion in reserves for economic stabilization and property tax relief. The balance increases to $12 billion when borrowable funds are included. Coverage from ending general fund cash for each set-aside is good, ranging from 3.4 times (x) in July to 11.3x in March. Coverage for the entire note issuance from projected closing cash balance is 1.2x rising to 3.7x including borrowables. Texas has an excellent record of cash management, and revenue estimates tend to be conservative. The Texas economy has enjoyed strong growth in recent years with gains since 2004 ahead of the nation. Employment rose 2.1% in June 2007 from a year earlier. Personal income growth also has been strong, rising 7.2% in the first quarter of 2007, compared to 5.8% nationally. The sales tax, Texas' main revenue source, is up 10.3% for eleven months of fiscal 2007 through July 31, 2007 from the same period last year and is 8.4% over forecast. Oil and gas tax collections, projected to decline from a year ago, are slightly ahead of forecast with the decline now expected to be around 17%. The projected fiscal 2007 ending balance of $8.17 billion is up from $3.7 billion as originally estimated. During a 2006 special legislative session the state finalized See finalization. a major reform of the school funding system a system or scheme of finance or revenue by which provision is made for paying the interest or principal of a public debt. See also: Funding , in response to a 2005 state supreme court ruling that found certain aspects of the system unconstitutional. The reform package lowered local property taxes and increased state education support to approximately 50% by fiscal 2008 from 36% in fiscal 2006. The reforms are being funded through new tax revenues, broadening taxes on business, raising the motor vehicle sales and use tax Sales and use tax refers to:
n. pl. bi·en·ni·ums or bi·en·ni·a A two-year period. [Latin : bi-, two; see bi-1 + annus, year; see at- . While the projected balances are sufficient to cover requirements through the current biennium ending Aug. 31, 2007, funding shortfalls thereafter were originally expected to be absorbed by a combination of general fund revenues, surplus balances and revenue growth. More recent forecasts estimate such resources to be sufficient to fund property tax relief during the 2008-2009 biennium. The 2008-2009 biennial budget provides $14.2 billion in property tax relief from the property tax relief fund and general fund surplus. Absent legislation to smooth state education disbursements, note issuance in fiscal 2009 will more than double to $11 billion. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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