Wall Street’s Fitch Ratings has downgraded Suffolk County from an “A” to an “A-” rating for next week’s $49.15 million bond sale, saying the county’s performance “fell short” of expectations, and that its credit rating could drop further if it cannot maintain at least minimum reserves.
“The county lacks the reserves to address fiscal pressures in the event of even a moderate economic downturn,” said Fitch analysts, adding, “The county would be challenged to maintain current service levels without raising revenues.”
However, Standard and Poors maintained Suffolk’s “A” rating with a negative outlook. In its assessment Standard and Poors said though the county had made substantial progress, its “revenue growth and expenditure cuts have not been sufficient . . . to produce consistently positive operations and higher reserves.”
Vanessa Baird Street, spokeswoman for County Executive Steve Bellone, said the rating was “a mixed review and we don’t feel it will have a negative effect on borrowing next week.” The bond sale to be used for various public works projects is scheduled to begin the week of June 19.
“I think the rating agency has a firm grasp on what’s happening in the county,” said Legis. Kevin McCaffrey, leader of the Republican caucus. “I wish it was different and I wish I could convince my Democratic colleagues that things need to change, but they continue to spend and borrow beyond our means.”
In its rating, Fitch said it believed that “general revenue growth will remain below the rate of inflation” as it has over the last decade, adding “the natural pace of expenditure growth is expected to remain above the expected revenue growth, given the weak revenue performance and demands for contractual workforce spending.”
S&P, meanwhile, said it expected the county to have another operating deficit when the year-end audit was complete, in large part because the county overestimated its sales tax revenue by $71.9 million, largely because of lower than expected gasoline prices. However, S&P also called the county’s 3.55 percent forecast for sales tax growth this year conservative. It also found the county’s $3.4 billion budget, a 1.75 percent increase in spending, did not include any major increases in revenue to expense cuts, which would allow the county to rebuild its reserves.