Fitch Ratings lowered the outlook on Monroe County’s general obligation bonds’ A-minus rating to negative from stable on Wednesday.
The new outlook affects $125 million in series 2012 GO bonds and $249 million in series 2010 and prior GO bonds.
“Fitch’s negative outlook reflects the county’s highly constrained financial flexibility and projected structural imbalance,” Fitch analyst Stephen Friday said. “Fitch remains concerned about future negative performance given scant reserves and management’s commitment not to raise property taxes.”
New York Comptroller Thomas DiNapoli has named Monroe County the second most fiscally stressed local government in the state. He has said Rockland County is the most fiscally stressed.
Monroe county has a total of $596 million in long-term debt outstanding and no short-term debt, according to Fitch.
On the plus side, Friday said that the county is an upstate economic center that has diversified into healthcare and higher education, thanks to the presence of the University of Rochester. Population showed a small increase from 2002 to 2012.
County management has demonstrated adequate financial planning skills, Friday said.
It has low pension and other post-employment benefit costs. The county has a moderate overall net debt per capita of $2,648 and 5% of market value. Amortization is expected to be rapid.
On the negative side, the county projects budget deficits of around 4% in 2014 and 2015. These are similar to recent years’ gaps. However, the projections may prove pessimistic, Friday said.
The county has remained reliant on cash flow borrowing, which has been at a moderate 6% of revenue, Friday said.
In August Moody’s Investors Service downgraded Monroe County to Baa1 from A3 and put a negative outlook on the county.
