Dec. 12 (Bloomberg) -- New York’s Nassau County, whose finances are controlled by a state oversight board, had $1.2 billion in general-obligation bonds downgraded by Fitch Ratings.
The one-level cut to A+, Fitch’s fifth-highest ranking, comes three days after the county received permission from the Nassau County Interim Finance Authority to sell as much as $450 million in bonds during the next four years. NIFA, which the state created in 2000, seized control of the Long Island municipality’s finances in January after ruling that its budget had a gap of more than 1 percent of projected spending.
Fitch said it had anticipated that NIFA’s takeover “would enforce a level of fiscal discipline,” the ratings agency said in a statement today. “However, Fitch has not observed improvement in this area.”
While new borrowing would still require approval from the county Legislature, NIFA’s permission last week marked a turnaround for its board members, who had opposed adding more debt to the county’s balance sheet.
Nassau’s “strained financial position” stems from its reliance on sales-tax revenue, consistent use of non-recurring measures to close budget gaps and slim reserve levels, Fitch said.
The Legislature in October passed County Executive Edward Mangano’s $2.64 billion spending plan for 2012 to plug a $310 million deficit. Amendments developed with input from NIFA assumed $150 million in concessions from unions through February.
Nassau’s median property tax of $8,206 is the second- highest among U.S. counties, according to the Tax Foundation in Washington. Its median household income was $92,450 from 2005- 2009, according to U.S. Census Bureau data.
--Editors: Mark Schoifet, Stephen Merelman
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