Standard & Poor's has lowered the long-term general obligation debt of Amityville to A-minus from A, with a negative outlook.
"The downgrade is due to the deterioration of the village's financial position over the last three years," said analyst Kate Hackett.
The rating reflects the Long Island village's significant drawdown of general fund reserves since fiscal 2008, resulting in fund balance deficits of $604,000 and $374,000 at the end of fiscal 2010 and 2011, respectively.
In addition, Standard & Poor's cited diminished general fund liquidity and a lack of a meaningful plan to restore general fund reserves, coupled with a limited ability to cut personnel costs or increase property taxes under the tax-cap limit the New York General Assembly passed last summer.
Standard & Poor's said offsetting factors included a moderate debt burden and modest capital needs.
Amityville is 40 miles east of New York City.