Wall St. firm puts Nassau's bonds on negative outlook

A major Wall Street rating agency put Nassau County bonds on a "negative outlook" Wednesday but did not change its current rating.

A move from "stable" to "negative" is a first step toward a potential downgrade in rating status, which county officials said could lead to higher borrowing costs for the county.

Moody’s Investors Service was critical of the county’s past budgeting, under County Executive Thomas Suozzi, and its plans for the future, being mapped by the current county executive, Edward Mangano.

It voiced concern about Mangano’s "increased reliance on bond funding" to pay property tax refunds.

Such borrowing has been sharply criticized by Moody’s and others in the past and was blamed for leading the county to the brink of bankruptcy and the creation of the watchdog Nassau County Interim Finance Authority in 2000.

In 2006, Suozzi began using some operating funds to pay the refunds, and there is $50 million for the refunds in this year’s operating budget that Mangano inherited from Suozzi.

However, Mangano, who took office Jan. 1, has removed that funding in future years, and plans to borrow to pay off the claims, a practice Moody’s said would "exacerbate" budget problems.

The rating agency also questioned Mangano’s decision to sign the repeal of a home energy tax that was expected to bring in $38 million annually.

Mangano has pegged much of his budget-balancing efforts on reforming property tax assessments, early retirements and getting labor concessions — but Moodys said those savings "may be difficult to achieve" and were "a significant driver of our assignment of a negative outlook..."

The agency noted that there had been structural deficits in the annual budgets since 2007, and "are likely to increase" because of Mangano’s plans.

Mangano released a statement saying, "Moody’s negative outlook is based on deficits from 2007 and 2008, long before County Executive Ed Mangano took office."

A spokesman for Suozzi, Bruce Nyman, released a statement pointing out that Wall Street rating agencies had consistently given upgrades during Suozzi’s tenure.

"Moody’s is worried about the future, not the past; about the next two years, not the past two," the statement said. "Tom Suozzi got 13 bond upgrades in eight years. Ed Mangano has been in five months and he got a ‘negative outlook.’ Do the math. It’s Tom Suozzi 13-0; Ed Mangano 0-1."

Suozzi is a consultant for Cablevision, which owns Newsday.