Report: Jobless rate could hurt county credit

Three new reports weigh in on the health of Mecklenburg County's economy - and whether factors like a high employment rate may make it more expensive for the county to borrow money for construction projects in the future.


The reports all generally praise the diversity of the local economy, and financial management within the county.

But they also make clear analysts are paying attention to changes locally. For example, both Moody's and Fitch note the local unemployment rate exceeds that of the nation.


Among the comments:

• From Standard & Poor's: "The county continues to experience long-term sustainable growth of both its tax base and employment base which has provided strong operating results and subsequent reserve build-up, positioning the county with financial flexibility during economic slowdowns"
• From Fitch: Local financial sector will "sustain continued economic growth" even with the Wachovia acquisition and “other potential industry changes."
• From Moody's: "The full impact of the downturn in financial services has yet to be felt, and we will continue to monitor the implications for the city." Later: The county's growing and vibrant economy has historically been asignificant factor in the Aaa rating (but) protracted unemployment at the current level and a longer than average recession could challenge the county's credit profile." (Earlier this year, the agency assigned a negative outlook on all tax-backed U.S. local governments)

Mecklenburg leaders meet with the rating agencies each year, usually before the county borrows money for construction projects. All three agencies upheld the county's longstanding triple-A bond rating, which allows it to get the best interest-rates on its bonds. A downgrade of the rating could make it more costly to pay off the debt.
The county is preparing to borrow up to $100 million in bonds next month, and is restructuring some of its other debt. - April Bethea

Where is the stimulus money going?

Mecklenburg may be the state's largest county, but it ranks third in the amount of federal stimulus dollars allocated so far, according to data from the state agency created to handle distribution of the money.

The N.C. Office of Economic Recovery and Investment recently released this breakdown of stimulus allocations, showing how much was given to counties for a variety of projects like public housing, crime control and school lunch equipment.

(Note: you'll need to zoom in on the PDF to read the report.)

The chart only includes allocations made through the end of June and does not include any direct grants awarded to local governments by federal agencies.

Mecklenburg has received $219 million so far, including $37.3 million for roads and bridges, and $20.8 million to the Charlotte Area Transit System. By comparison, Cumberland County has received more than $255 million, with another $246 million going to Wake County.

Still, an analysis by the Observer shows that, with the exception of Cumberland, urban counties have received less on a per-person basis in stimulus money so far than rural counties. Mecklenburg has received $246 per person in stimulus funds through the end of June, compared with a statewide average of $328 per person, according to the article by reporter Steve Harrison.

That's largely because many of the dollars are being doled out using current state formulas, some of which favor rural communities.