Hamilton boasting state's top bond rating

As Hamilton County changes its top leader, the county boasts the best bond rating of any county in Tennessee -- and is among the top 2 percent of all counties nationwide, according to a study released last week.

With comparatively rich reserves and only half the per capita debt of most counties, Hamilton was among only 20 counties in the United States to boost its bond rating to the top level with Standard & Poor's Ratings Services during the recession since 2008.

Among the nation's 3,143 counties, Hamilton was among only 67 with a best AAA rating from S&P.

"There are always reasons to spend more money, but the question is where you get that money," said Claude Ramsey, who stepped down as Hamilton County's mayor Tuesday to become deputy to Gov.-elect Bill Haslam. "Over the past few years, we've tried to put controls on our spending, and I operated under the assumption that the economy wasn't going to get real better very quick, so we need to protect our reserves."

Hamilton's fund reserve as a share of the county budget is nearly 60 percent above the average for U.S. counties. Hamilton's debt, adjusted for the population, is 47 percent less than the national average.

The 2008 announcements of $1.3 billion of new investments in Chattanooga by Volkswagen and Alstom Power helped lift Hamilton's financial outlook and the county's bond rating was raised in 2009 to the top grade for S&P, Hamilton County Finance Director Louis Wright said.

"We've always tried to operate the county's finances very conservatively and build our fund balance to ensure we have adequate reserves for any adversity," he said.

The extra reserves and lower debt level could allow the county to borrow more money for capital projects such as new schools, parks or roads.

But county officials said they want to keep the AAA rating to help the county borrow money at lower interest rates because borrowers take on less risk of default with highly rated debt than they would with lower-rated county debt.

"While the full effects of the recession have yet to be felt, we believe these strong [debt and reserve] ratios are evidence that AAA-rated counties are performing well, having come into the recession with strong reserves and well-managed operations," S&P credit analyst Karl Jacob said in the report.

Wright said the county cut the term of most of its borrowing to only 15 years over the past generation and now has an average debt maturity for outstanding bonds of only seven years.

"We have a shorter-term borrowing philosophy, and we have worked to maintain and build a good fund balance," Wright said.