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Westchester County was notified by S&P Global Ratings and Fitch Ratings that the county’s financial outlook has been downgraded to AA+.
Moody’s assigned Aa1 to Westchester, officials announced on Tuesday afternoon.
The county has now lost its AAA rating - the highest ranking available - in each of the Big 3 rating agencies.
Westchester County Executive George Latimer cited “serious financial stress” as the reason.
“These downgrades are certainly no surprise," he said. "As we have said these past few months, the county is in serious financial stress.
"We have had to make hard decisions in drafting the 2019 proposed fiscal budget; we are saving wherever we can, such as renegotiating contracts such as the Liberty Lines deal. Regardless of the many steps we are taking to improve our footing, these problems were not created overnight and they will not be solved overnight.”
S&P said that “the rating action reflects the view of the county’s narrow financial reserves at fiscal year-end 2017, and the paying of the union contracts when no money had been previously budgeted to do so.”
Fitch put the rating outlook at “stable” based on the County’s continued reliance on one-time budgetary actions. S&P stated that, “should the County successfully implement additional revenue measures, as well as continued evaluating expenditure reductions to produce structurally balanced operations while constraining long-term liability growth, we could revise the outlook to stable.”
Moody’s report also stated that “the rating also reflects the county’s deteriorated financial position that is likely to improve in the near-term given strong financial management.”
Latimer has proposed a 2 percent property tax levy increase for the county’s near $2 billion 2019 budget after nearly a decade under former Executive Rob Astorino, who didn’t raise property taxes for eight years. The 2019 budget proposal is currently being reviewed.
“We remain concerned over the county’s ability to sustainably align revenue and expenditures and rebuild reserves to a level consistent with that of similarly rated or higher-rated peers," S&P analyst Nora Wittstruck said, according to a Bloomberg report. “We believe the revenue forecast assumes a couple of significant risks."
“We are going to right this ship,” Latimer said in a statement. “My goal is to have the County’s AAA bond rating, by Moody’s, S&P and Fitch, return before I leave office. But, we are going to have to face up to the necessity of tough choices in the days ahead.”
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