LEONARDTOWN, Md. — Fitch Ratings has assigned a ‘AAA’ rating to St. Mary’s County, Maryland’s $30 million series 2025 consolidated public improvement bonds, the agency announced on April 14, 2025. Fitch also affirmed the county’s Issuer Default Rating (IDR) and its outstanding general obligation (GO) bonds at ‘AAA’ with a stable outlook, reflecting the county’s robust financial and economic standing.
The ‘AAA’ rating, the highest possible, is driven by St. Mary’s County’s strong demographic and economic metrics, including a high median household income and low unemployment rate compared to national benchmarks, according to Fitch’s U.S. Public Finance Local Government Rating Criteria.
The county’s financial resilience, assessed at ‘aaa,’ is supported by ample budgetary flexibility and a history of maintaining unrestricted general fund reserves well above the 7.5% minimum required for the top assessment. In fiscal year 2024, unrestricted reserves equaled 24.0% of spending, aligning with the county’s policy of maintaining a 15% fund balance.
St. Mary’s County benefits from broad revenue-raising powers and high control over expenditures, contributing to its ‘ample’ budgetary flexibility. The county’s revenue volatility is rated as ‘strongest,’ with its weakest three-year revenue performance showing a 3.3% increase for the period ending in fiscal 2015, compared to a median issuer decline of 4.5%. However, the rating is tempered by a ‘weak’ population growth trend, with a 10-year annual population increase of just 0.7% as of 2023, and high economic concentration due to the Naval Air Station (NAS) Patuxent River, the county’s largest employer with approximately 25,000 employees.
The bonds are backed by the county’s full faith, credit, and unlimited taxing power, ensuring strong security for investors. Fitch’s Local Government Rating Model assigned St. Mary’s County a Model Implied Rating of ‘AAA’ with a numerical value of 10.27, positioning it at the lower end of the ‘AAA’ range. The rating reflects a combination of strong metrics, such as a median household income at 146.6% of the portfolio median and an unemployment rate at 68.8% of the national rate, alongside adjustments for economic concentration and liabilities.
Fitch outlined potential risks that could lead to a downgrade, including a sustained 20% increase in long-term liabilities, a material weakening in demographic or economic metrics, or a decline in general fund balances below 7.5% of spending. A positive rating action is not applicable, as ‘AAA’ is the highest rating. The county’s long-term liability burden, assessed as ‘strong,’ includes liabilities to personal income at 4.0% and carrying costs at 9.9% of governmental expenditures, both favorable compared to Fitch’s portfolio.
The county’s economic profile is bolstered by a 2023 population of 115,479 and educational attainment, with 35.1% of residents holding a bachelor’s degree or higher. However, the high economic concentration tied to NAS Patuxent River, which accounts for a significant portion of local employment, introduces some risk. Fitch adjusted its model for this concentration using statewide county median data for the natural resources and mining sector, which was absent from local data.
St. Mary’s County’s ‘AAA’ rating underscores its fiscal discipline and economic strengths, positioning it well for the issuance of the 2025 bonds. The stable outlook reflects confidence in the county’s ability to maintain its financial and economic metrics moving forward.
