Standard & Poor's Ratings Services said it lowered its long-term rating one notch, to A from A-plus on Suffolk County, N.Y.'s outstanding general obligation bonds.
At the same time, it assigned a long-term rating of A to the county's series 2015C refunding GO bonds and 2015B public improvement bonds. The outlook is negative.
It also assigned an SP-1 rating to the county's 2015 series I tax anticipation notes.
"The downgrade is based on the county's prolonged negative available reserve position and continued weak budgetary performance," said Standard & Poor's credit analyst Ruth Ducret.
The county's faith and credit GO pledge secures bonds, including the statutory authorization to levy ad valorem taxes on all real property in the county, subject to the provisions of the 2011 tax levy limitation law, which imposes additional procedural requirements on the ability of municipalities to increase the real property tax levy year over year.
Officials plan to use proceeds from the 2015B bonds to finance capital improvements as well as various settlements and judgments. Proceeds from the 2015C bonds will be used to refund the county's 2005REF, 2007A, and 2008B bonds for present value savings. There is no extension of maturity and savings are taken evenly over the maturity schedule.
While the county has made substantial progress in rebalancing its operations following its first declaration of a fiscal emergency in 2012, revenue growth coupled with reductions in expenditures have not been sufficient at this point to produce consistently positive operations and higher reserves.
Despite the county's proactive steps to reduce headcount by 1,189, the successful renegotiation of health care benefits with all employee unions, including 15% contributions for new employees, the merger of the treasury and comptroller offices within county government for cost savings and the closure of the John J. Foley nursing facility among other initiatives, S&P believes continued structural action will be necessary to build up reserves amid rising costs and slow revenue growth.
