Tax Cap Factor in Suffolk County Downgrade

New York State’s 2% tax cap law contributed to Standard & Poor’s downgrading Suffolk County’s credit rating by one notch just ahead of two bond sales.

Suffolk County Executive Steve Bellone has proposed a $2.97 billion 2016 budget that is a 1% increase and stays within the 2011 tax levy limitation allowance. S&P lowered the Long Island county’s long-term bond rating to A from A-plus on Oct. 8 citing negative available reserves.

“When faced with the option of breaking the tax cap or having a Wall Street rating agency move the county from an A-plus rating to an A the administration chose to maintain its promise to taxpayers and not break the tax cap,” said Suffolk County spokesman Justin Meyers in a statement.

Suffolk is slated to borrow $51 million in a public improvement serial bonds-2015 Series B sale on Wednesday. The county is also planning to refinance $106 million in a refunding serial bonds-2015 Series C transaction and is issuing $100 million in tax anticipation notes that same day.

Great Neck, N.Y.-based Capital Markets Advisors is the financial advisor on all three deals.

Fitch Ratings cut Suffolk’s bond rating to A from A-plus in March 2013 after the county was hit hard by Hurricane Sandy. Moody’s Investors Service downgraded Suffolk to A3 from A2 in March 2014.