Fitch Ratings has upgraded Nassau County's long-term debt to stable from negative citing expectations that the large Long Island municipality will continue making "modest progress" reducing its budget deficit.
The suburban county just outside New York City had its A rating maintained by Fitch on $1.6 billion of outstanding general obligation bonds. Fitch analysts Karen Wagner and Amy Laskey cited Nassau's "improved" relationship with the Nassau Interim Finance Authority, a state-monitoring board that has controlled county's finances since 2011, as a credit positive going forward and a key driver for the stable outlook. Fitch had downgraded Nassau from A+ to A in June 2013.
"The 'A' rating and stable outlook incorporate Fitch's expectation that the county will continue to make modest progress in sustainable deficit reduction to maintain a stable, albeit tightly balanced, financial profile," Fitch analysts said in a Nov. 21 report. "The revision of the outlook to stable from negative largely reflects slow and steady reduction in the structural deficit and county and NIFA projections for manageable deficits going forward."
Despite the upgrade, Fitch also emphasized that Nassau has weak reserves and is too dependent on sales tax revenues. The county is projecting a $48.5 million decrease in sales tax revenues in 2014, a 4.4% drop from the year's adopted spending plan.
Nassau County Executive Ed Mangano issued a statement on Fitch's new report saying "this improved outlook reflects the progress government leaders have made in coming together in a bipartisan manner to address decades of poor fiscal policies."
Nassau County is located around 15 miles east of Manhattan with a population of roughly 1.3 million.
