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the county's credit quality will maintain at least the current rating level <br />regardless of the outcome of these lawsuits, the related uncertainty constrains <br />the county's upward potential in this regard. <br /> <br />Capital expenditure program, liquidity, and debt. <br />Capital expenditure was about C$12 million in 2002, or 15% of total <br />expenditure. The majority of capital expenditure was dedicated to <br />maintenance and expansion of road infrastructure, Other capital expenditure <br />included work on the Sun Parlor Home Long-Term Care Facility and the land <br />ambulance infrastructure. The last of the debt related to the Sun Parlor Home <br />was rapaid in 2003. The county's main capital expenditure in the coming <br />years is expected to be roadwork. Essex expects to spend about C$5 million <br />per year on maintenance and C$2 million to C$3 million per year on <br />expansion. Standard & Poor's believes the county's capital expenditure plan is <br />well within its means, <br /> <br />Essex's liquidity position is good. Cash and equivalents amounted to C$26.8 <br />million in 2002, or 39% of operating expenditure. These holdings, tagelher <br />with the county's long-established C$8,0 million line of credit, amounted to <br />51% of operating expenditure in 2002. Essex has also been a net creditor for <br />many years with cash and equivalents net of debt amounting to 14% of <br />operating revenue in 2002. Essex is expected to maintain net creditor statas <br />or close to it, despite gradual reductions to certain reserves and related cash <br />in the coming years. The county is thus expected to maintain liquidity that is <br />well above average. <br /> <br />Essex's current debt burden is very Iow. The county's C$15.4 million of direct <br />debt outstanding in 2002 amounted to only 19% of operating revenue, the <br />vast majority seE-supported. Tax-supported debt amounted to an extremely <br />Iow 1% of total revenue in 2002. Debt service cost was also extremely Iow in <br />2002 at 3% of total revenue. Interest expense, at 2% of 2002 operating <br />revenue, was also Iow, although to a lesser degree. The county's debt burden <br />is not expected to significantly increase as a result of the current capital <br />expenditure plan; direct debt should remain well below 30% of operating <br />revenue in the next few years, <br /> <br />The mutual lawsuits outstanding between Essex and MFP that concern the <br />financing of the landfill site operated by the Essex-Windsor Solid Waste <br />Authority could double the county's liabilities to about C$32 million, or 40% of <br />operating revenue, Although Standard & Poor's expects the county's credit <br />quality will maintain at least the current rating level regardless of the outcome <br />of these lawsuits, the related uncertainty constrains the county's upward credit <br />quality potential. The landfill financing represents the county's only <br />involvement with MFP. Essex has no other significant contingent liabilities. <br /> <br />Outlook <br />The positive outlook reflects Standard & Poor's expectation that Essox's credit <br />quality might well improve in the coming years to the extent that Essex <br />maintains its current approach to funding capital expenditure with minimal <br />debt issuance and no large unexpected capital projects are undedaken, <br />lawsuits are settled with no significant increase to the county's liabilities, and <br />economic performance remains relatively stable. <br /> <br /> Table I County of Essex Economic Summary <br /> <br /> Total % aged 14 % aged 65 Median <br /> population years or years or <br /> younger older age <br /> <br />Population summary* 166,573 21.6 11.2 36.2 <br /> <br /> <br />