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Unemployment rate has dropped as Henry County reverses financial fate

HENRY COUNTY, VA – A recent report by Davenport Financial indicates a positive trend for the overall financial health of Henry County.

Comparing data from 2010, the county’s unemployment rate has dropped from 15.1 percent to 4.9 percent in July 2021 and 3.2 percent pre-pandemic.

Because of the heavy job losses in the previous decade from the furniture and textile industries, many businesses were lost and the county was considered financially “weak” by the top credit-rating agencies.

Today, the county’s unemployment rate is below the national average of 5.7 percent and in-line with the Commonwealth’s rate of 4.1 percent, according to the report.

Davenport Financial noted that the county’s pre-pandemic unemployment rate was amongst the strongest in the state, outside of the Northern Virginia beltway.

Moreover, the credit-rating for Henry County now sits in the “AA” range which is considered “strong” and reduces financing costs over the long-run.

By refunding approximately $17.3 million of debt, the county has reduced its principal amount of debt from 2015 and 2016 bonds to $14.6 million and locked in a cash flow savings of $1.6 million.

In addition to the reduction of debt, there has been a proliferation of international companies investing into the area including industries from England, Sweden, Canada, Germany, Italy and Poland.

Total investment in the past three years alone has led to $287.7 million in new investment, the report notes.

The average hourly wage in Henry County has risen from $16 an hour to $20 an hour in the past two years due to the uptick in new investment.

According to Moody’s, S&P, and Fitch, the three top credit-rating agencies, the reversal in financial health trends is attributable to the county’s “strong management” and “good financial policies and practices.”

Moody’s found that the county has a “strong reserve and liquidity position supported by formal fiscal policies” and that the moderately-sized tax base is experiencing modest growth.

S&P added that the county has a “strong budgetary performance and operating surpluses” and “very strong” budgetary flexibility, available fund balance and liquidity.

Davenport Financial found that the county’s “very strong” credit-rating is backed by sound policy choices from leadership.

One such policy was the decision to diversify away “from being almost solely reliant on the furniture and textile industries.”

The parity in industries protects the county from mass job and revenue losses in the future should a company decide to relocate operations or cease to exist, according to the report.

Davenport’s report also noted the county has sufficient financial reserves, and endorsed the approach that reserve funds are best used for one-time costs that do not recur in subsequent budget years.

Another metric noted in the report was the county’s low real property tax rate.

While the median rate of all counties in Virginia is approximately $0.69, Henry County boasts a real property tax rate of $0.555.

After analyzing the data, the county’s financial advisor concluded the report with a few observations.

The county is advised to “stay the course.”

As noted in the report, the county has done well to strengthen its financial position over the past decade and should the county change the formula, “it may have a negative impact on its ability to obtain funding” for emergencies or increases in costs to access capital.

The financial advisor also concentrated on the county’s management team.

Davenport Financial states that the “Board works well together” which is deemed a key factor in the credit-rating agencies’ methodologies and scorecards.

As stated in the report, “major initiatives were identified in tumultuous times, a strategic plan was made and the key was having the cohesive leadership to follow and implement that plan.”

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