Moody's Investors Service said it has downgraded to A2 from A1 the rating on $1.4 billion of outstanding Suffolk County, N.Y., general obligation debt.
Moody's assigned an A2 rating Suffolk's $62.3 million public improvement series bonds - 2013 Series A.
The outlook remains negative.
The debt is secured by the county's general obligation pledge as limited by the Property Tax Cap Act (Chapter 97 (Part A) of the Laws of the State of New York, 2011). Proceeds from this issue will be used to fund the county's capital improvement plan.
The downgrade to A2 reflects the county's failure to meet projected fiscal 2012 year end estimates despite deficit mitigation plans and the use of non-recurring revenue adjustments to balance the fiscal 2013 budget.
The rating also reflects the county's narrow liquidity resulting from recurring operating deficits that have significantly reduced reserve levels. The county continues to face a structural operating gap in the current fiscal year, necessitating significant midyear budget adjustments and significant annual cash flow borrowing. The county benefits from a sizeable and diverse tax base and a manageable debt position.
The negative outlook reflects ongoing use of non-recurring revenue adjustments and failure to implement meaningful spending reductions. Future rating reviews will consider management's ability to implement meaningful gap closuring measures in the coming months.