Moody’s Investors Service has upgraded from A2 to A1 Hopkins County, TX’s General Obligation Limited Tax Bonds. The rating action affects $18.3 million in rated debt. The upgrade reflects the county’s improved financial position and the stable outlook for the county’s financial position based on healthy revenue levels.
The rating incorporates the stability of the county’s moderately-sized agricultural tax base, below average wealth metrics, and above average debt burden. Among credit strengths are a healthy financial position with increased reserve levels, conservative budgeting, and the stable tax base. Challenges to the budget include only the average wealth metrics and the debt burden. The rating could be upgraded if a significant tax base expansion and diversification along with improved wealth indices should occur. However, if the county sees a significant structural imbalance and narrowing of reserves, the rating could be downgraded.
County Judge Robert Newsom told KSST News that a representative of Moody’s thought it time to upgrade the rating based on the fiscal conservative policies the county has utilized over the past few years and that debt and reserves are in good shape. Noting that when the rating fell during the 2008 recession, as did the ratings across the country, the county had laid off employees and taken other steps necessary to continue the fiscal conservatism. Newsom stated the county has built on that conservatism and has recovered well from the time of the recession.
Moody’s expects the county’s tax base to continue moderate growth over the near-term based on the development and expansion at local employers. As a county seat and accounts for about half of the tax base, the economic rating of the City of Sulphur Springs (A1) also assisted in the rate increase. The diversifying, albeit slow, through a growing industrial presence was also a factor. Also factoring into the considerations are the ten top taxpayers making up 15.5% of total assessed values in fiscal year 2016. The fact that these top taxpayers include several food processors was a strong factor. A diverse tax base consisting of 27.1% acreage, 20.9% single family residential, 17.2% farm and ranch, and 12.4% commercial and industrial property was a factor in the steady growth for the county. The county’s $1.7 billion full value growth has been an average of 2.8% annually over the past five years but increased 4.1% in fiscal 2016.
County officials reported the addition of 75 new single family homes and several small businesses within the county which contribute to the 2017 tax base. An addition of 150 new jobs at newly opened Plant Process Fabrication, a manufacturing plant that produces products for renewable fuel products was also a plus. Low unemployment rate, lower than the state and national average, for Hopkins County also was a factor.
With the county’s cash and investment position historically strong and stable and expected to remain so, it is also expected the county’s debt burden will decline steadily. The county’s overall debt burden is 5.7% reflecting the overlapping obligations of the City of Sulphur Springs and the Sulphur Springs Independent School District (A1).