Rockland County’s credit rating took another hit on Friday when Standard & Poor’s dropped it to BBB-minus from BBB-plus.
“We lowered the rating on the county’s GO debt due to the continued erosion of its financial position and once strong reserves,” said analyst Danielle Leonardis.
“In addition, projections show a negative balance in the county’s total and unreserved general fund balance for fiscal years 2011 and 2012.”
The rating is now on par with Moody’s Investors Service’s Baa3 rating, which it assigned over a month ago, citing the county’s significant budget gap.
S&P’s downgrade comes after the state legislature ended its session without approving the county’s request to issue deficit reduction bonds, which the credit rating agency views as a negative rating factor.
Rockland County hoped to isse up to $80 million of bonds to help plug its deficit. The county’s finance commissioner, Stephen DeGroat, told the Bond Buyer that the county still plans to pay down its gap but — without the bonds — at a slower pace.
Standard & Poor’s said it also factored in the rating the county’s diverse, suburban economic base, very strong wealth and income indicators, and a low overall debt burden.
While the county legislature has taken a series of steps to address its financial position, uncertainty remains about bridging a potential $40 million budget imbalance for fiscal 2012, analysts said.
The agency also assigned a negative outlook, which reflects its view of the recent budget challenges, as well as the county’s modest cost-cutting measures to bridge these imbalances.
“If management is not willing or able to implement and adhere to a plan to restore structural balance and reserves, Standard & Poor’s could consider another downgrade,” the report said.