Standard & Poor’s revised its outlook to negative on its A-plus rating of Suffolk County, N.Y.
A factor leading to the negative outlook is the county’s persistent structural deficits, which have depleted operating reserves and liquidity, wrote S&P credit analyst Lindsay Wilhelm. Another factor is the county’s challenge in addressing the significant imbalance given reliance on economically sensitive sales tax revenue and substantial nondiscretionary expenditures.
Wilhelm noted positive factors supporting the A-plus rating. These include median household effective buying income levels 48% higher than the national average. Market value of assessed values per capita is extremely strong at $170,546.
Wilhelm also noted signs of economic recovery in the county. Further, the county has come up with some one-time and recurring measures to partially address the county’s structural budget gap.
Finally, Wilhelm pointed out that county’s debt burden is low, at $3,776 per capita and 2.2% of market property value. The county’s direct debt burden is only 30% of the total.
The negative outlook indicates that S&P believes there is a one in three chance that it will downgrade the county in the next two years.
Suffolk County encompasses the eastern two-thirds of Long Island. At 1.5 million residents, it is the largest New York county outside of New York City.
On Monday Fitch Ratings dropped Suffolk County’s general obligation debt to A from A-plus. Moody’s Investors Service rates the debt A1 with a negative outlook.