WESTCHESTER COUNTY, N.Y. -- Moody’s Investors Services downgraded Westchester County's bond rating from AAA to Aa1 citing depleted reserves and unpredictable tax revenues as some of the major challenges facing the county .
Standard & Poor’s and Fitch Ratings separately confirmed Westchester’s AAA credit ratings, saying the county government continues to be managed in a fiscally sound and strong way, County Executive Rob Astorino announced Wednesday.
The announcement from the agencies comes as the county government prepares to go to the bond market Nov. 26 to sell $64.1 million in long-term bonds to pay for a variety of capital projects.
The third agency, Moody’s Investment Services, gave the county its second-highest rating: Aa1. All three agencies gave the county a “stable” outlook.
Westchester County continues to have the highest bond rating of any county in the state,” Astorino said. “This doesn’t happen by accident and it is a recognition of our prudent financial practices. We remain committed to making financial decisions that protect the interests of our residents, businesses and taxpayers.”
In practical terms, a high bond rating lowers borrowing costs and translates into savings for taxpayers.
In its report released Monday, Fitch credited the county with maintaining a diverse economy, progress on labor negotiations and manageable debts, among other things.
“Strong financial management is evidenced by conservative budgeting and a demonstrated willingness to reduce expenditures to close budget gaps,” Fitch said.
Standard & Poor’s, in its affirmation of the AAA rating on Wednesday, cited the county’s “strong management” coupled with having “good financial policies and practices in place.”
In its report released Wednesday, Moody’s gave the county a “stable outlook” and its second-highest rating. Moody’s main concern is the county government’s participation in the state’s pension amortization program and its effect on the county’s budget reserves.
In contrast, S&P and Fitch had no issue with the county’s participation in this program.
“In a perfect world, the county would pay its pension costs in full each year,” said Astorino. “But when pension costs, which are beyond the county’s control, rise 3000 percent in 12 years that’s just not possible.
When your choices are tax increases, hundreds of layoffs or entering the state’s amortization, you enter the amortization program reluctantly. The good news is that the county is on a path to be out of the program in two years. In the real world, you have to make these tough decisions.”
The schedule for the county’s borrowing under the state’s pension amortization program is $42 million in 2013; $28 million in 2014; $10 million in 2015; and zero in 2016.
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