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The key credit factors include a satisfactory financial position, a small debt burden and a moderate pension liability. It also reflects a
modestly sized tax base and an adequate wealth and income profile.

Cannon County, TN – Annual Comment on Cannon County
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Originally posted on the official file linked above:

Cannon County is located in central Tennessee. The county seat of Woodbury is approximately 40 miles southeast of Nashville. The county has a population of 13,976 and a low population density of 53 people per square mile. The county’s median family income is $59,126 (3rd quartile) and the October 2020 unemployment rate was 6% (1st quartile) 2 . The largest industry sectors that drive the local economy are manufacturing, health services, and retail trade.

We regard the coronavirus outbreak as a social risk under our environmental, social and governance framework, given the substantial implications for public health and safety and the economy. We do not see any material immediate credit risks for Cannon County. However, the situation surrounding coronavirus is rapidly evolving and the longer term
impact will depend on both the severity and duration of the crisis. If our view of the credit quality of Cannon County changes, we will update our opinion at that time.

Credit Overview
The credit position for Cannon County is sound, though its A3 rating is well under the median rating of Aa2 for counties nationwide. The key credit factors include a satisfactory financial position, a small debt burden and a moderate pension liability. It also reflects a modestly sized tax base and an adequate wealth and income profile.

Finances: The county has a satisfactory financial position, which is consistent with the A3 rating assigned. The cash balance as a percent of operating revenues (41.8%) approximates the US median, and rose between 2015 and 2019. Furthermore, the fund balance as a percent of operating revenues (32.2%) is consistent with the US median. However, while the
county’s operating fund reserves are healthy, its general fund reserves are narrow and have a history of negative available fund balance levels.

Debt and Pensions: The debt and pension liabilities of Cannon County are small overall and are a modest credit strength in relation to the assigned rating of A3. The net direct debt to full value (0.5%) approximates the US median. On the contrary, it decreased from 2015 to 2019. Furthermore, the Moody’s-adjusted net pension liability to operating revenues (1.2x) is
on par with the US median.

Economy and Tax Base: The county has a satisfactory economy and tax base, which are relatively in line with the assigned rating of A3. The full value per capita ($72,323) is roughly equivalent to the US median, and saw an impressive increase between 2015 and MOODY’S INVESTORS SERVICE U.S. PUBLIC FINANCE 2019. However, the total full value ($1 billion) is well below other Moody’s-rated counties nationwide, while the median family income equates to 79.9% of the US level.

The coronavirus is driving an unprecedented economic slowdown. We currently forecast US GDP to decline significantly during 2020
with a gradual recovery commencing toward the end of the year. Local governments with the highest exposure to tourism, hospitality,
healthcare, retail, and oil and gas could suffer particularly severe impacts.

Management and Governance: Tennessee Counties have an institutional framework score 3 of “Aaa”, which is very strong. The sector
has one or more major revenue sources that are not subject to any caps. Unpredictable revenue fluctuations tend to be moderate,
or between 5-10% annually. Across the sector, fixed and mandated costs are generally less than 25% of expenditures. Unpredictable
expenditure fluctuations tend to be minor, under 5% annually.

Sector Trends – Tennessee Counties

Tennessee’s economic expansion and tax base growth is expected to continue over the next several years despite the coronavirus
pandemic. The rate and extent of tax base growth over the near term will depend largely on how long it takes for economic activity to
return to normal levels. Major revenue sources such as property taxes and local and state sales taxes support Tennessee counties’ stable
financial operations. While sales taxes are typically more economically sensitive by nature, given that they are levied on everything in
Tennessee, including food and groceries, they will be less affected than in other states. The majority of municipal employees within the
Tennessee counties participate in the Political Subdivision Pension Plan (PSPP), an agent multiple-employer defined benefit pension
plan and the local portions are generally well funded.

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