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This story was updated Tuesday afternoon to include a comment from the Board of Legislators.
WHITE PLAINS, N.Y. - Moody's took note of Westchester County's recent reliance on reserve funds this Monday and downgraded the county's bond outlooks from stable to negative.
The negative outlook was assigned to $34.8 million in general obligations bonds, $835.7 million in post-sale county debt, and $120 million in outstanding lease revenue bonds, according to a Moody's Investors Service report. The negative outlook suggests the county will remain pressured in "the near term."
Although the county hung onto its Aaa bond ratings, the Moody's report noted an "ongoing structural imbalance that has driven reserves declines that may limit the county's financial flexibility," and mentioned that if Westchester continues to dig into reserves it may fall "out of line with similarly rated county's."
The outlook downgrading also stems from Westchester's "significant reliance on economically sensitive revenue sources," such as the county pulling 14.3 percent of its 2010 revenue from state aid and another 27.3 percent from sales, mortgage, auto and hotel taxes.
County Executive Robert Astorino's office released a statement Tuesday afternoon saying the county received Aaa bond ratings from three rating agencies - Fitch Reports, Standard & Poor's and Moody's Investors Services - and "stable" outlooks from all agencies except Moody's.
"In practical terms, having three AAA ratings means that our costs when we borrow are kept as low as possible," Astorino, a Republican, said in a statement. "Moody's warning is significant and cannot be ignored. At budget time last year, I warned the Board of Legislatures that they were on shaky financial ground when they dipped into our reserve fund to restore spending cuts that I had proposed in my state of county message last April. I said that the county was 'fortunate but fragile.' As the legislators look ahead to 2012 budget, I hope they will heed this warning."
Later Friday afternoon the county legislators released a statement accusing Astorino of convincing Moody's the county was economically-burdened with his "alarmist rhetoric."
"When Astorino said last years budget would create a $166 million deficit and we actually returned $67 million to fund balance, he ignored the news and kept up his line that the sky is falling,'" said Board of Legislators Chairman Kenneth Jenkins (D-Yonkers). "Now, Moodys has clearly reacted to the dire predictions and falsehoods with their negative outlook for Westchester.
Other legislators, including MaryJane Shimsky, (D-Hastings-on-Hudson), also blamed Astorino.
"Thanks to the county executives fiscally inaccurate media campaign to create huge budget deficits for the future, he has effectively sabotaged the countys stable bond outlook, potentially costing county taxpayers millions of dollars, Shimsky said in a statement.
What are your thoughts on the negative outlook? Do you think Westchester will have to pay more to borrow money? Are you concerned? Or do you consider this a minor warning? Email thoughts to strangle@thedailywhiteplains.com and we'll include responses in future coverage.
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