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Suffolk County credit rating outlook remains negative
Three Wall Street agencies have affirmed Suffolk’s credit rating but kept negative outlooks as the county prepares to sell $61.7 million in bonds.
Fitch Ratings retained its ‘A’ rating on the general obligation bonds for capital projects, which are to be sold today. Moody’s Investors Service kept its ‘A2’ rating, and Standard & Poor’s held its rating at A+.
The agencies had downgraded Suffolk in 2012, and assigned the negative outlook, when officials projected a three-year budget deficit of $530 million. More recently, county officials estimated the shortfall at $180 million, and said the 2014 budget would close that gap.
In choosing not to issue another downgrade, the three agencies agreed that County Executive Steve Bellone has made strides in bringing the budget closer to structural balance by trimming the workforce by about 1,000 employees since early 2012, negotiating employee health plan savings and in closing the John J. Foley Skilled Nursing Facility in Yaphank, which had run at a deficit.
The reports also note risks in Bellone’s 2014 budget proposal, now under review by the county Legislature. The $2.76 billion spending plan assumes higher sales tax growth next year due to superstorm Sandy rebuilding, that revenue-generating video slot terminals will be operating by September and that the state will approve a plan to defer nearly $33 million in debt payments.
Fitch “believes further expenditure reductions will be required. Financial operations will remain challenged as the county struggles to achieve ongoing budgetary balance.”