Moody's Investors Service said it has downgraded Monroe County, N.Y.'s general obligation rating to Baa1 from A3 and revised the outlook to negative from stable.

The downgrade affects $454.6 million of outstanding long-term debt secured by the county's general obligationpledge as limited by the Property Tax Cap Act (Chapter 97 (Part A) of the Laws of the State of New York, 2011).

The downgrade to Baa1 reflects a significant weakening in the county's financial position, with a structurally imbalanced operating budget dependent on nonrecurring revenues and reliance on cash flow borrowing to maintain operations.

The county ran an operating deficit in fiscal 2012 and may do so again in fiscal 2013 given aggressive budgeting of tax lien sales and sales tax revenue.

The rating also incorporates the county's diverse economy, large, stable tax base, and manageable debt profile.

The negative outlook reflects the belief that the county will remain challenged to regain structurally balanced operations given its reliance on one-time revenue sources to maintain budgetary balance. Continuing financial deterioration could lead to another downgrade within the next two years.

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