Moody’s Investors Service today downgraded Westchester’s bond rating from Aaa to Aa1, but Standard & Poor’s and Fitch Ratings reaffirmed their Aaa rating for the county, The Journal News/lohud.com reports.
The downgrade from Moody’s, which has given a negative outlook on Westchester County’s debt for the past two years, could cost the county money by raising the interest rate on the upcoming sale of $59.1 million in bonds for county projects and $5 million in bonds for projects in county special districts.
Moody’s said it made the downgrade because of the county’s continued structural imbalances, limited liquidity and shrinking reserves. The structural imbalances are particularly due to the county’s borrowing to pay pension costs, the agency said.
Westchester is still the only county in the state with two Aaa ratings, officials said.
“This doesn’t happen by accident and it is a recognition of our prudent financial practices,” said County Executive Rob Astorino in a statement. “We remain committed to making financial decisions that protect the interests of our residents, businesses and taxpayers.”
Fitch’s report on Westchester came out Monday. Standard & Poor’s recently reaffirmed the county’s Aaa rating.
The Moody’s report said the county’s negatives are offset by the “substantial, wealthy and diverse tax base,” with a well-off population that benefits from the proximity to New York City. The county’s average debt and “strong fiscal oversight” are also strengths, it said.
Astorino has stressed the need to build back the county’s fund balance. The budget projects that the $141 million in general fund reserves, about 8.1 percent of the budget, will roll over to 2014. But he proposes borrowing $28 million of the county’s $96 million pension bill for 2014.
“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 3,000 percent in 12 years that’s just not possible.”
Legislator Ken Jenkins, the Democratic chairman of the county Board of Legislators, said he wants to take a closer look at the report but, “This is certainly something that the board was concerned about.”