Friday, 18 June 2010 00:00
On June 2, Moody’s Investor Services revised Nassau County’s rating outlook to negative from stable while retaining the current Aa3 rating. The Aa3 rating with negative outlook affects $1.3 billion of the County outstanding and guaranteed debt. The “negative outlook” could also result in a future rating downgrade with accompanying higher borrowing costs to the County.
“The previous administration left office with depleted fund reserves, a $248.5 million structural budget deficit, excessive use of bonding to pay current expenses and other budget gimmicks to balance the budget,” Nassau County Comptroller George Maragos said. “The Moody’s negative outlook should be viewed as a confirmation of the prior administration’s financial mismanagement and lax financial oversight. I was disappointed but not surprised with Moody’s placement of Nassau County debt in negative outlook.”
Maragos stated that the report from Moody’s highlights the fact that the assignment of a negative outlook is based upon Moody’s expectation that the county’s financial position declined further in 2009 and will continue in 2010, following deficits in fiscal years 2007 and 2008. Moody’s also lists the recession and housing downturn as factors for issuing a negative outlook.
“We must take the possibility of a downgrade very seriously and initiate strong preventive action to restore structural fiscal balance to the County operations,” Maragos added. “The current administration has presented an updated multi-year financial plan with steps to restore fiscal responsibility without increasing property taxes. The test will come in achieving the proposed budgetary steps.”