Wall Street agency downgrades Suffolk credit
A Wall Street rating agency downgraded Suffolk County's credit Monday, citing continuing struggles to close a large, lingering budget hole.
Fitch Ratings dropped the county one notch from A+ to A and assigned a negative outlook. A second agency, Standard & Poor's, maintained the county's A+ rating Monday, but downgraded its outlook from stable to negative. The actions come 10 months after Fitch and S&P reacted to Suffolk's potential $530 million multiyear shortfall by knocking its higher AA-rating.
County Executive Steve Bellone has said his 2013 budget erased nearly all of that initial projection. But because of superstorm Sandy and several stalled measures, officials estimate a new $250 million deficit through 2014.
Fitch's downgrade was based on predicted sales and property tax losses of nearly $50 million for Sandy, and because of stalled measures, including a $70 million proposal to sell and lease back county buildings and the $23 million sale of the John J. Foley Skilled Nursing Facility in Yaphank. Fitch also noted that the county is increasingly borrowing against future revenue to meet payroll needs.
While the rating agencies approved of Bellone's long-term deficit-cutting measures, including shrinking the workforce, Fitch expressed concern "a number of gap closing measures are of a nonrecurring nature and some may not come to fruition because of required state approval and litigation."
Deputy County Executive Jon Schneider said the downgrade wasn't a surprise. "The items they cite, frankly, are items we've been citing," he said, noting that Bellone is pushing to get the sale-leaseback approval and to either sell or close the nursing home.