Structural balance brings upgrades to Rockland County
Rockland County, New York, received its second upgrade in two months after eliminating cumulative general fund deficits.
Fitch Ratings upgraded Rockland’s long-term bondsto A from A-minus Thursday, and assigned a positive outlook, citing the county’s improved budget practices in eliminating a deficit that once reached $138 million.
S&P Global Ratings raised Rockland’s long-term debt by two notches in June to A-plus from A-minus. Moody’s Investors Service rates Rockland at A2 with a stable outlook following a two-notch upgrade last year.
“The upgrade to 'A' from 'A-' is reflective of the county's improved financial resilience following consecutive years of surplus resulting from gradual increases to revenues and the implementation of various operational improvements to minimize expenditure growth over time,” Fitch analyst Shannon McCue wrote in a report released Thursday afternoon. “The county has made significant operational improvements to build general fund reserves by eliminating annual general fund deficits.”
McCue credited Rockland with “decisive policy actions” during the past several years to tackle budget deficits that were driven largely by providing $95 million in general subsidies to the county’s hospital between 2011 and 2014. The 320,688-population county responded by closing its hospital in 2015 to save more than $20 million of annual general fund spending, implementing property tax rate increases and making significant cuts to its workforce.
“This upgrade shows that the difficult choices we made in the past are being noticed and paying dividends for our residents,” said Rockland County Executive Ed Day. “We have accomplished so much together, so quickly; we have brought Rockland back from the brink and are now poised to move into the bright future residents deserve.”
The county 25 miles north of Manhattan ended 2018 with a $19.5 million surplus aided by sales and uses taxes that exceeded budget assumptions by $10.5 million along with expenditures which were $12 million under budget. The positive budget results boosted Rockland’s available general fund reserves to $38.6 million or 7% of spending.
The county’s 2019 adopted budget raised property taxes by 2.9% and projected flat revenue from sales, mortgage and residential energy tax collections compared with 2018. McCue noted that the county is on pace based on year-to-date revenue collections to exceed the county’s budgeted amount by more than $5 million.
“The budget is balanced without the use of one-time revenues or appropriated general fund reserves,” McCue said. “The continuation of structurally balanced operations that bolster available fund balances and increase financial resilience could increase Fitch's assessment of the county's overall operating performance.”
Rockland issued $96 million of deficit financing bonds in May 2013 that were authorized by New York State under conditions that the county remain under budgetary oversight by the State Comptroller until 2024. McHugh noted that the county agreed to make budget adjustments based on recommendations from State Comptroller Tom DiNapoli, which has contributed to an improved financial position.
“I vowed to restore Rockland to a position of fiscal responsibility and strength," said Day, who was first elected county executive in 2013. "Through conservative budgeting and strict fiscal discipline we are making progress.”