A Wall Street rating service downgraded $1.5 billion in long-term Nassau County debt by a notch Tuesday, citing the "lack of significant process" by county officials in reducing its deficit reserve.
Fitch Ratings said it had downgraded Nassau's general obligation bonds from an "A+" to an "A" and was continuing its "negative" outlook for all long-term county debt.
The rating agency, which last year downgraded Nassau's short term bonds, said Tuesday it was concerned about the county's use of one-shot revenue to reduce its debt and the outcome of several ongoing lawsuits, which could cost the county millions of dollars.
Fitch said Nassau faces "potential significant liabilities" from recent court decisions. The rulings could force Nassau to pay more than $230 million in back pay and benefits from a wage freeze imposed by a state fiscal control board, and $80 million stemming from the county's attempt to shift the cost of property tax refunds to school districts and towns. "An adverse decision on appeal for either or both of these cases would further stress the county's already limited financial flexibility," Fitch said.
Credit downgrades typically result in increased borrowing costs.
Brian Nevin, spokesman for County Executive Edward Mangano, said Nassau is borrowing less and at lower interest rates than in recent years. Nevin said, "Mangano's policy of fewer taxes and less borrowing is working as Nassau County leads the state in terms of job growth and is no longer the highest taxed county in the nation."
County Comptroller George Maragos, who has scheduled a news conference Wednesday to announce the results of the 2012 fiscal year, said the downgrade "mainly reflects the litigation risks regarding the wage freeze dispute with labor."
Minority Leader Kevan Abrahams (D-Freeport) said the downgrade was "proof from an objective source that Ed Mangano's mismanagement and reckless borrowing . . . continues to plague Nassau taxpayers."Fitch said the county is projecting a roughly $45 million surplus in 2012 -- slightly ahead of earlier projections -- and that sales tax revenue is approximately $22 million ahead of budget.
Fitch also downgraded $259 million in Nassau Health Care Corporation county-guaranteed bonds and $13.1 million in Nassau Regional Off-Track Betting Corporation bonds.
Last week, Moody's Investor Service, another rating agency, downgraded Suffolk's $1.4 billion in debt, citing the county's failure to make "meaningful spending reductions."