Defense Articles

Fitch Ratings assigns an ‘AA+’ rating to the State of New Hampshire’s $47,860,000 general obligation refunding bonds, 2003 series A (delayed delivery) expected through negotiation with A.G. Edwards & Sons, Inc. on Nov. 21. These non-callable bonds will be due July 15, 2004-2011 and will be dated the expected date of delivery of April 17, 2003. The ‘AA+’ rating on approximately $610 million outstanding general obligation bonds is affirmed by Fitch. This issue is intended to refund $48.14 million 1993 series bonds maturing 2004-11 for debt service savings.

New Hampshire’s (the state) economic buoyancy and resilience as well as its conservative debt and financial policies underpin its credit standing. The national downturn has had a relatively mild economic impact on the state, but business taxes have significantly underperformed projections resulting in a deficit in the combined general and education funds. Reserves currently exceed the deficit but revenue performance and measures taken to maintain balance will determine credit direction.

The initial plan was underfunded and the major revenue source, a statewide property tax, was valid only until Jan. 1, 2003. A new school funding plan was implemented last year which retained existing dedicated funding sources (including previous business tax increases)and provided for further increases in business taxes and other measures as well as higher general fund transfers to the Education Fund. The statewide property tax rate was reduced but the sunset was removed. Such measures would provide for largely balanced operations, however, the funding measures increased the state’s reliance on less predictable revenue sources, particularly business taxes, at the same time that the assumption of education as a state responsibility has reduced spending side flexibility. This aspect of school funding remains vulnerability.

For fiscal 2002 revenues underperformed by approximately $44 million, and spending exceeded the budget by about $20 million, resulting in an unaudited $40 million deficit on June 30, 2002, subsequently increasing to $50 million with later adjustments. The revenue shortfall was primarily due to lower than expected business tax collections. The widening of the deficit in fiscal 2003 to at least the $70.4 million level projected in May is still estimated for the June 30, 2003 biennium close, which could be larger as business tax weakness continued through October. Total general and education fund revenues were$11 million or 1.5% below revised expectations for the four months, and the state is also exposed to additional federal Medicaid assistance losses which could also increase the revenue short fall; $14.8 million is under appeal but an additional $24.6 million payment was recently deferred due to a new challenge of the state’s methodology. Existing state reserves still include $55 million in the stabilization fund and now $34 million in the health care fund, reduced pending appeal. New Hampshire has net tax-supported debt of $601.6 million, equal to $486 per capita and to 1.4% of personal income, very moderate ratios. Commercial paper is used for bond anticipation purposes although none is currently outstanding. Strong personal income and employment growth continued through 2000, sharply slowing to the national average in 2001, but New Hampshire still ranks sixth in per capita personal income. The current economic downturn has been relatively mild with employment increasing 0.8% in 2001 and 0.1% in Sept. 2002 as compared with September 2001.

Fitch rates Lincoln County, North Carolina’s (the county) $9,000,000 general obligation school bonds, series 2002A ‘AA-.’ The bonds are expected to sell competitively on Dec. 3, 2002 and mature June 1, 2004-2021. Fitch affirms the ‘AA-’ rating on the county’s $59.7 million in outstanding general obligation bonds.

The ‘AA-’ rating is based on the county’s sound financial position, moderate debt levels, and economic growth, spurred by its proximity to the City of Charlotte. It also takes into consideration the county’s lack of a capital improvement plan to address its growth related needs. The rating incorporates a one-notch enhancement due to the oversight of the North Carolina Local Government Commission.

Lincoln County is in the western portion of North Carolina, northwest of Mecklenburg County. Lincolnton, the county seat, is the only incorporated municipality within the county. The rural character of the county continues to change as residential and commercial growth in the eastern portions of the county are turning the area around Lake Norman into a commuting suburb of Charlotte. Assessed valuation has grown 8.4% on average annually over the last five years, including a 20.9% revaluation increase in 2001. Population in the county has grown at a faster rate than that of the state over the last decade, to an estimated 64,999 people in 2001. School enrollment has grown at the annual average rate of 2.2% over the last six years and is expected to increase at the annual average rate of 2.5% over the next several years.

Manufacturing continues to play an important role in the local economy, constituting 31% of the local employment base and 39% of earnings. While several plants have reduced their work force in the last year, others have expanded their operations and added employees. County unemployment rates have increased from 4.1% in 2000 to a high 7.6% in 2001. In September 2002, unemployment was 7.6% in the county compared to state and national levels of 5.8% and 5.6%, respectively

The county’s financial position is sound. A tax rate increase in fiscal 2002 restored structural balance to general fund operations after a $1.3 million drawdown in 2001. A $761,000 drawdown in fiscal 2002 was due to the county’s forgiveness in August 2001 of $2.96 million loaned to the water and sewer fund. Fiscal 2002 unreserved fund balance equaled $9.2 million, or a sound 15.9% of spending.

Adding in the state statute reserve, the balance includes the entire fund balance of $15.6 million, or 27% of spending. For fiscal 2003, the county is expecting that 7 months’ worth of revenues from a newly authorized one-half cent local option sales tax will compensate for roughly 71% of budgeted withheld state reimbursements. The $484,000 difference will be made up through contingency funds and fund balance. The tax begins on Dec. 1, 2002 and will be an on-going revenue source. Revenues from existing sales taxes for the first quarter of fiscal 2003 are on budget.

“Tougher ‘n a two dollar steak,” is what the man behind the shiny glass counter said when I asked him about his rental Taurus PT-92. Rental firearms at the local indoor range lead an extremely hard life. They’re used hard every day and maintenance is minimal. I like to ask occasionally which guns are withstanding the abuse and which are out for service. “Yeah, it’ll sure show you in a hurry which designs hold up and which don’t,” he continued.

The Taurus PT-92 resting in a corner of the display case was distinguished by a badly worn finish and a bumper crop of dents and dings that told the story of a pistol that had lived hard yet survived. I suspect a lot of shiny new guns had come into service and left broken and battered while the old PT-92 continued to soldier on.

The Taurus PT-92 is a workhorse and long-term star of the Taurus line. There’s no polymer plastic frame here, the PT-92 features a tough but light forged aluminum frame and carbon or stainless steel slide. Big, easy-to-see three-dot patridge sights combined with a hand filling grip and traditional double/single action operation make for excellent accuracy.

The PT-92 has a lot going for it–10 plus one capacity with current magazines, superb reliability, fast, easy field stripping, the Taurus Security System (a key locking safety feature) and the Taurus Lifetime Repair policy–but perhaps the best feature is the safety design. The safety is mounted on the frame, just as it should be, with a de-cocking feature and the capacity for “condition one” cocked and locked carry. It’s a system that gives you the maximum flexibility to choose how you desire to carry or store the pistol.

The Rating Outlook for Memphis’s general obligation bonds is Stable. Prudent expenditure management and moderate tax base growth, along with a willingness to increase property tax rates, continue to facilitate financial stability. Residential and commercial reinvestment in downtown Memphis has been impressive, and progress continues. The city’s population grew during the 1990s, reversing prior losses. The rating outlook reflects the city’s undesignated general fund balance target of 5%-8% of annual expenditures, as well as recent increases in the tax-supported debt load, including last year’s $210 million Memphis and Shelby County Sports Authority (the sports authority) bond issue, a contingent liability of both Shelby County and Memphis expected to be paid from numerous tax streams related to arena attendance and tourist activity.

Credit strengths include historically sound financial operations along with tax base, economic, and revenue growth. The city’s unreserved general fund balance has been above the targeted level in every fiscal year since 1994. Despite the area’s substantial tourism-based economy and the economic significance of Memphis International Airport, which Fitch rates ‘A+’ with a negative rating outlook, the city’s general fund generated sizable surpluses in the last two fiscal years after three consecutive drawdowns. Receipts of sales tax and other economically-sensitive taxes declined in each of the last two fiscal years, but property tax revenues remain strong and expenditure growth has been kept in check. Fiscal 2003 general fund operations are expected to yield break-even to slightly positive results. The Mayor will present the proposed fiscal 2004 budget on April 15.

Credit concerns center on the city’s direct and overlapping tax-supported debt levels, which have risen in recent years to a level considered well above average by Fitch Ratings. Overall debt is 6.2% of market value, including sports authority obligations supported by various taxes, with a 50% debt service makeup provision by both the county and the city. Net direct debt service was 15.3% of tax-supported spending in fiscal 2002. The city’s fiscal 2003 capital improvement program projects $558 million in general obligation bond issuance between fiscal years 2003-2007, which would be a sustainable pace, considering both the current above-average rate of debt amortization and expected tax base expansion.

Fitch Ratings has assigned a ‘AAA’ rating to the $19.9 million general obligation (GO) bonds, series 2004 of Tempe, Arizona. In addition, the ‘AAA’ rating on the city’s $188 million in GO bonds outstanding has been affirmed. The new issue, dated May 1, 2004, is scheduled to sell on or about May 6 via competitive bid. The Rating Outlook is Stable.

The bonds will be structured with serial maturities from July 1, 2005-2024. Bonds maturing on or after July 1, 2014 are subject to optional redemption prior to maturity on July 1, 2013, or any date thereafter, at par plus accrued interest. Repayment security is provided from ad valorem taxes levied on all taxable property within the city, without limitation as to rate or amount. Proceeds of the bonds will be used for various capital improvements including street, park, police, fire, and water and sewer.

The ‘AAA’ rating reflects the strength of the city’s financial position, sound financial stewardship, moderate debt burden, and the diversity of Tempe’s economy. Sizable cash reserves and prudent financial management and policies are significant characteristics of the high credit quality of the city. Both the general and water and wastewater funds have large undesignated balances, providing a substantial cushion to counter difficult economic cycles or unexpected operating contingencies.

The direct debt of the city is amortized at an above-average rate, while requiring a modest portion of current resources, and future borrowing is expected to be manageable. Although the city has not been immune from the recent economic slowdown, the secondary assessed valuation (SAV) of the tax base continues to show solid growth and local sales tax revenue collections have stabilized. Also, despite the decline in the amount of state shared revenue support, solid fiscal planning, including expenditure controls and contingency action, leads to a stable outlook.

Tempe, with an estimated population of 159,615, is located in Maricopa County, Arizona, the economic hub and population center of the state. The city is home to several major employers, including Arizona State University and numerous computer technology manufacturing concerns.

Government employment is significant, as are the services and trade sectors. Although new housing starts have slowed the past two years, SAV of the tax base continues to grow, posting an 8.5% increase for fiscal 2004 and averaging 9.1% annually for the last five years. The number of new housing starts declined to 106 in 2002 from the 291 registered in the prior year. However, for fiscal 2003, 852 new housing starts were recorded.

The city’s formal financial policies require an undesignated general fund balance of 25% of anticipated revenues. For fiscal 2003, the general fund had an undesignated fund balance of just over $34.5 million, representing 28% of revenues and 24.7% of expenditures and transfers. Similarly, the pooled cash and investments of $83.7 million in the water and wastewater fund equaled 23 months of anticipated revenues, far surpassing the policy of six months. Although slightly lower than in recent years, the liquidity position of the general fund was also sound for fiscal 2003 with $63.9 million in pooled cash and investments.

For the second consecutive year, the general fund posted a substantial operating deficit, just over $10.8 million, despite expenditure reductions. For fiscal 2004, 125 general fund vacant or unfilled positions were eliminated. Combined with other cost measures, this reduced costs by approximately $9.2 million. Also, year-to-date for fiscal 2004, the general fund is on track for balanced financial operations.

Of the city’s approximate $188 million in GO bonds outstanding, about half are supported by the water and wastewater fund. Approximately $13.7 million of this issue will be used for water and sewer improvement projects and therefore will be paid for from associated revenues. In past years, a significant portion of the CIP had been funded from pay-as-you-go sources; however, this was curtailed in fiscal 2003. GO debt is amortized at an above-average rate, with 55% retired in ten years, while debt service represented a manageable 8.4% of general and debt service fund expenditures for fiscal 2003. Direct debt is moderate at $1,079 per capita and 1.6% of estimated full cash value. Overall debt is moderate as a ratio of estimated full cash value, at 3.6%, and nearing the high end of the per capita range at $2,397.