Moody”™s Investors Services downgraded Westchester County”™s bond rating, from AAA to Aa1 with a stable outlook. Westchester is set to sell $64.1 million in long-term bonds Nov. 26 to pay for several capital projects.
The company cited “continued structural imbalances and limited liquidity” as reasons for the downgrade. It listed as challenges depleted reserves and unpredictable tax revenues. Moody”™s warned against additional depletion of the fund balance and “structural imbalances” arising specifically from the use of pension amortization.
Under a state program, the county is planning in 2014 for the second year in a row to essentially defer part of its obligation to the state pension fund.
County Executive Robert P. Astorino, a Republican, said in a written statement that the county plans to reduce its amortization borrowing incrementally and be out of the program entirely in 2016. “In a perfect world, the county would pay its pension costs in full each year,” Astorino said. “When your choices are tax increases, hundreds of layoffs or entering the state”™s amortization, you enter the amortization program reluctantly.”
Ratings can affect the interest rate the county must pay when it issues bonds used for capital projects.
Board of Legislators Chairman Ken Jenkins, a Democrat, called the downgrade a disappointment and said the administration kept board members in the dark about discussions with ratings agencies. “The higher interest rates that county most likely will pay now on its bond issuance will end up being felt by Westchester residents and business owners,” Jenkins said.
Up until last week, the county had AAA ratings, the highest attainable, from all three of the major investor services ”“ Moody”™s, Fitch and Standard and Poor”™s. The county finance department website said Westchester had been the only county in the state to have a AAA rating from all three. S&P and Fitch renewed their AAA rankings for the county this week.
UPDATED: This article was updated from its original form with comments added from the Westchester County executive and Board of Legislators chairman.
