Improvement comes despite expected new debt

By Diana McFarland

Managing editor

Isle of Wight County recently received a credit rating upgrade from one agency and remained unchanged with another.

Standard & Poor’s Financial Services LLC upgraded the county’s rating from AA to AA+ — the third increase from the agency since 2008. 

Moody’s Investor Services ranked Isle of Wight at Aa2. {mprestriction ids=”1,2,3,4,5,6″}

Isle of Wight County Administrator Randy Keaton appeared particularly pleased with the Standard & Poor’s upgrade.

“I never saw a rating this high in a rural county,” said Keaton at Thursday’s Board meeting. 

Board Chairman William McCarty pointed out that the AA+ rating is one step below the highest issued by the agency. 

In its report, Standard & Poor’s credited the county fiscal management as strong, to include revenue projections that look back five to seven years and account for volatility in certain revenue streams. 

However, Standard & Poor’s did state that the county’s debt and contingent liability profile was weak. 

Isle of Wight was ranked as eighth out of 95 Virginia counties, according to the 2017 comparative report of local government revenues and expenditures, published by the Virginia Auditor of Public Accounts.

“As the county has grown and more capital costs are funded on a pay-as-you go basis in lieu of taking on additional debt, its overall net debt has fallen as a percentage of market value,” according to Standard & Poor’s report, which also noted Isle of Wight’s plans to take on new debt for school projects in the next one or two years. 

“Nonetheless, given the growth in the tax base and formal debt issuance policies in place, we do not expect the county’s debt profile to weaken,” according to the report. 

“This is really your report card,” said Smithfield Supervisor Dick Grice, adding that he expected the rating to go down. 

“This is a remarkable feat,” he said. 

Favorable credit ratings allow the county to obtain lower interest rates on bonds, resulting in significant savings to taxpayers, said Isle of Wight Assistant County Administrator Don Robertson. 

An AA rating by Standard and Poor’s indicates a strong capacity to meet financial obligations, according to the agency. 

Under the Moody’s rating system, Aa means a locality is considered upper-medium grade and are subject to a low credit risk. 

Under Moody’s, Aaa is the highest rating. 

Isle of Wight is waiting on one last report from Fitch Ratings.  {/mprestriction}