Financial U-turn lifts Rockland County, N.Y. rating
New York’s Rockland County was lifted to a single-A-level rating by Moody’s Investors Service for the first time in nearly six years after turning a deficit that once was well north of $100 million into a surplus.
Moody’s upgraded Rockland two notches Tuesday to A2 from Baa1 with a stable outlook citing improved budgeting practices that have enhanced reserve levels and the county’s liquidity.
The county issued $96 million of deficit reduction bonds in 2014 and finished with a $10 million surplus at the end of 2017. The county was faced with a $138 million deficit in late 2013 and has been subject to mandatory review by State Comptroller Thomas DiNapoli since 2014.
“We are improving our budgeting and revenue estimates,” said Rockland County Finance Commissioner Stephen DeGroat. “There is a lot of momentum.”
Tuesday’s upgrade marked Rockland’s thirdMoody’s upgrade in four years. The county, which was among 35 local governments cited in a 2014 fiscal stress list compiled by DiNapoli, was cut three notches to just above junk level at Baa3 in May 2012 after incurring a more than $40 million budget gap that year.
Rockland’s general obligation bonds are rated A-minus by Fitch Ratings and S&P Global Ratings. The large suburban county is located around 30 miles north of Manhattan and had a population of 320,688 as of 2015.
Moody’s analyst Robert Weber said savings Rockland achieved from closing a county-run nursing home in 2015 also was a factor in the two-notch upgrade. The nursing home had been dependent on operating subsidies from the county’s general fund for a number of years before it was shuttered.
“The county's narrow reserve position will continue to improve over the medium-term given conservative budget management and state oversight,” said Weber. “Through a combination of improved budgeting of economically sensitive revenues, issuance of deficit reduction bonds, which came with significant state oversight of budgets and the closure of the county run nursing home, reserves over the past three years have significantly improved.”
DeGroat said the county is paying off the $96 million deficit reduction bonds sold in 2014 at a rate of $13.2 million per year and has saved between $3 million to $5 million on debt service costs in that span. The county has reduced its reliance on issuing tax anticipation notes with around $60 million of TANs slated for 2018. He said the county has ended its past practice of selling RANs.
Moody’s noted that Rockland has navigated increasing pension and other-post-employment benefit costs by eliminating deferrals and making payments early. The county made full pension payments in 2016 and 2017.
“We’re moving in the right direction,” said DeGroat, a public finance veteran who was tapped in 2011 to steer Rockland’s turnaround effort. “It was a tough, rocky road for a while.”