Rockland County, N.Y., plans to competitively sell $33.8 million of tax-exempt general obligation bonds on Thursday.
The county also plans to sell $25 million of revenue anticipation notes in case aid payments from New York don't come in when expected. The move is a response to the state's practice of managing its cash-flow troubles this year by delaying reimbursements to counties.
Rockland's adopted 2010 budget counts on $95.1 million of state aid. The county had received $44.1 million as of Aug. 10, according to an official statement.
"The bulk of the county's services are really running state programs," said county finance commissioner H. Chris Kopf. "We're about $25 million behind in collections from the state but we still have to meet payroll and payments to vendors."
Rockland's adopted 2010 budget counted on $95.1 million of state aid. As of Aug. 10, it has received $44.1 million, according to the preliminary official statement.
The county will use the note proceeds to offset timing differences between disbursements and receipt of state aid, the POS said. Reimbursements to counties aren't late as a matter of statute but rather in comparison to past practice and even that situation is set to improve, said state Division of Budget spokesman Erik Kriss.
"We have informed them we expect to be caught up by the end of August," Kriss said, speaking of counties in general.
Most of the Rockland debt proceeds — $28.4 million — will be combined with available funds to redeem $29.4 million of bond anticipation notes sold last year that mature Sept. 2. The remaining $5.4 million of proceeds will be used to finance various capital projects and fund the acquisition of open land for preservation purposes.
The bonds will be structured as serials with maturities out to 17 years.
Orrick, Herrington & Sutcliffe LLP is bond counsel and Capital Markets Advisors LLC is Rockland's financial adviser.
In March, Standard & Poor's downgraded the county's GO two notches to single-A with a negative outlook, citing its "continued weakening financial position." The rating agency has since revised that outlook to "developing."
The economic downturn hurt Rockland's sensitive sales and mortgage tax revenues. The recession exacerbated fiscal difficulties that arose when a tax certiorari case was settled in 2006 with Mirant New York Inc., which had been the county's largest taxpayer.
"Years of unpaid taxes from Mirant, which totaled an estimated $175 million, have weakened the county's once-strong liquidity and reserves," Standard & Poor's said in rating report. "The county has had to issue Tans, in increasing amounts over the past few fiscal years, to cover Mirant's failure to pay its taxes to the local school districts, towns, and county."
On the positive side, the agency cited Rockland's proximity to the greater New York City metro region, its strong wealth and income indicators, and low overall debt burden.
The county lies about 32 miles north of Midtown Manhattan on the Western bank of the Hudson River. It's population of 297,159 has a median household income of $84,105 that is 62% higher than the $52,175 national median, according to 2008 U.S. Census estimates.
The largest private employer in Rockland — Wyeth — was acquired by Pfizer, Inc. as part of an industry-wide consolidation process in the pharmaceutical sector. Pfizer announced plans in 2009 to reduce its 2,450 staff in the county by 1,250 people over the next four years.
Faced with falling revenues, Kopf said Rockland has worked with county government employees to cut costs through early retirement incentives and attrition.
It also cut utility costs and reduced car use. The county has trimmed about 350 jobs the past three years to reach its present workforce of roughly 2,700.
Since 2001, Rockland has issued $209.1 million new-money bonds according to Thomson Reuters. The county has about $305 million of GO bonds outstanding.