Nassau rating downgraded by Fitch

"Fitch anticipated that the control period imposed by the Nassau County Interim Finance Authority in January 2011, while not changing fundamental budgeting practices, would enforce a level of fiscal discipline," Fitch said in a news release. "However, Fitch has not observed improvement in this area."

The rating agency cut the county's rating on $1.2 billion of general obligation bonds to A-plus with a stable outlook, the fifth-highest rating, from AA-minus. The highest rating is a Triple A.

Fitch also questioned Nassau's plan to lease its sewer facilities to a private operator in return for an upfront payment. While most of the proceeds would be used to pay off debt, "plans to use a portion for budget relief is a concern."

The downgrade means that the county no longer has a Double-A rating from any of the three major rating agencies. Downgrades generally raise borrowing costs.

Nassau County Deputy County Executive for Finance Tim Sullivan responded to the downgrade by stressing the county's progress and plans.

"The county legislature and NIFA approved a balanced-budget plan that closes over a $300 million budget deficit next year and provides a framework for bringing the county's budget into [Generally Accepted Accounting Principles] balance by 2016," Sullivan said in a statement.