Fitch Ratings has affirmed Columbia County, GA's (the county) Issuer Default Rating (IDR) and approximately $13.2 million in outstanding general obligation (GO) bonds, series 2017 at 'AAA'. 

The Rating Outlook is Stable.

SECURITY 

The bonds are general obligations of Columbia County, for which its full faith and credit and unlimited taxing power are irrevocably pledged.

ANALYTICAL CONCLUSION 

The affirmation of the ratings reflects Fitch's expectation for Columbia County to maintain very healthy financial flexibility through future economic cycles, consistent with a history of strong operating performance and high reserve levels. The rating also reflects the county's strong revenue growth prospects, ample expenditure flexibility, and very low long-term liability (LTL) burden.

Economic Resource Base

Columbia County is located on the South Carolina border, just northwest of Augusta, GA (IDR AA/Stable). The county's population continues to expand rapidly, exceeding state and national growth trends. The county's 2022 population was estimated at 162,419, up more than 31% from the 2010 Census. 

KEY RATING DRIVERS

Revenue Framework: 'aaa'

Fitch expects the county to realize continued strong revenue growth due to ongoing population growth and development. Revenue-raising capacity is high, as there is no legal property tax rate limit in Georgia.

Expenditure Framework: 'aa'

Fitch expects the pace of spending to be marginally above revenue growth as the county's service levels keep up with continued strong population growth. Fixed carrying costs for debt service and OPEB costs are low at about 6% of governmental spending; the county has no carrying costs for pensions as the county does not provide defined benefit pensions. The non-restrictive labor force environment in Georgia provides for operational flexibility. The bulk of general fund spending is devoted to public safety.

Long-Term Liability Burden: 'aaa' 

The county's LTL burden is very low at less than 2% of personal income. Debt makes up the entirety of the metric with about half coming from overlapping debt associated with the county's school district. Management indicates no near-term debt plans. Management relies on special purpose local option sales tax (SPLOST) revenues to support capital spending. 

Operating Performance: 'aaa' 

The county's superior inherent budget flexibility and maintenance of strong general fund reserves provide the county with superior gap-closing capacity, positioning it well to manage through economic downturns while maintaining a high level of fundamental financial flexibility. 

RATING SENSITIVITIES 

Factors that could, individually or collectively, lead to positive rating action/upgrade:

--Not applicable for issuers with a 'AAA' rating.

Factors that could, individually or collectively, lead to negative rating action/downgrade:

--A sustained increase in the LTL burden to consistently above 10% of personal income;

--Significant weakening of the county's gap-closing capacity that would indicate weakened financial resilience. 

BEST/WORST CASE RATING SCENARIO 

International scale credit ratings of Sovereigns, Public Finance and Infrastructure issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of three notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sector-specific best- and worst-case scenario credit ratings, visit https://www.fitchratings.com/site/re/10111579.

CURRENT DEVELOPMENTS

Columbia County's economic and financial performance was sound prior to the onset of the pandemic and has remained very strong through the recovery. The county ended fiscal year 2022 (FYE Jun 30) with a net operating surplus of $2.3 million (3% of spending) increasing its unrestricted general fund balance to $55.6 million or a very high 62% of spending. 

The county's fiscal 2023 general fund budget of $88.7 million is up 6% over the fiscal 2022 adopted budget. Management reports that fiscal 2023 general fund revenues are currently trending above budgeted levels while expenditures are below. The county projects adding somewhere between $5 million to $10 million to general fund balance by fiscal year end largely attributable to continued growth in the tax base and strong sales tax performance exceeding budget expectations.

The proposed fiscal 2024 general fund budget of $95.2 million is up over 7% from fiscal 2023. Management is conservatively budgeting a 5% increase in the tax base with a millage rate rollback. The rollback rate is the setting of the millage rate at a revenue neutral rate compared with the prior year. Annual growth in the tax base has enabled the county to roll back its operating millage in five of the past six years. Should the county elect to adopt a millage rate higher than the rollback rate, state law requires the county to go through a notification process with its residents. The fiscal 2024 budget also includes the addition of 20 new positions.

The county was allocated $30.4 million in American Rescue Plan Act (ARPA) funds. The county had purchased the city of Harlem's water utility in July 2021 and plans to use approximately $17.5 million of the allocation to upgrade the system. Approximately $10 million classified as lost revenue will be utilized for various network and recreation projects. Remaining funds will be used for public safety and economic development projects. 

The SPLOST, which is utilized primarily for capital improvement projects, was approved and renewed through 2028 in November 2022. Management indicates there are currently no plans for additional debt issuance in the near term. The county's five-year capital improvement plan will be funded primarily by SPLOST funds. Capital needs will also continue to be partially funded by Title Ad Valorem Tax (TAVT) proceeds, which are accounted for within the general fund with no restrictions, and transferred out to the TAVT fund for certain projects.

Growth in commercial and industrial development remains strong as existing businesses expand and new businesses locate to the county. A $200 million Amazon Fulfillment Center was completed and officially opened recently in the county's business park. Since 2019, the county has added over three million square feet of industrial space. Fort Gordon, a military base partially located in the county, continues to see aggressive growth with its US Army Cyber Command headquarters and its Cyber Center of Excellence which will continue to attract cyber defense contractors and other technology workers to the region. 

CREDIT PROFILE 

The county benefits from its proximity to Augusta. Primary economic sectors include healthcare, manufacturing, retail and leisure activities. The continued expansion of the commercial and retail sectors, and the presence of Fort Gordon, a growing military base partially located in the county, provide for added stability and diversity to the economy. Growth in the tax base is expected to continue due to ongoing development within the county and across the Augusta Metropolitan Region. County MHI levels exceed those of the state and the nation and the county's growing economy and significant employment gains continue to produce unemployment rates that remain below state and national levels. 

In addition to the sources of information identified in Fitch's applicable criteria specified below, this action was informed by information from Lumesis. 

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

ESG CONSIDERATIONS 

Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg

Additional information is available on www.fitchratings.com