Suffolk upgraded to highest short-term credit quality rating.
Suffolk County Executive Steve Bellone has announced that two major credit rating agencies, Fitch Ratings and S&P Ratings, have upgraded the County’s outlook from negative to stable and from negative to positive respectively. The upgrades are due to the County’s ongoing commitment to budgetary management and discipline.
“This positive development is a direct result of our fiscally responsible approach to budgeting even during this unprecedented pandemic,” said Suffolk County Executive Steve Bellone. “For the third year in a row, we are projecting that Suffolk County will achieve an operating surplus while continuing our commitment to public safety, investing in economic development and protecting the environment.”
According to both Fitch and S&P, the upgrades of the Rating Outlook reflects the county's reduced exposure to near-term financial disruptions due to the effects of the coronavirus pandemic.
Federal relief, the sharp recovery of sales tax receipts in the second half of 2020 into 2021 and the voter approved usage of Assessment Stabilization Reserve Fund (ASRF) funds have helped to improve the county's overall financial resilience.
Recent economic trends of increasing residential property values, robust home sales along with the County’s ongoing economic development activity, targeted programs to grow STEM industries, as well as transportation improvements are expected to fuel property tax base growth.
The County eliminated all cash flow borrowings in 2021, a significant improvement per Fitch and S&P. Fitch’s short-term rating upgrade to 'F1' from 'F2' reflects the County’s improved cash flow projections that provide strong note repayment at maturity. An F1 rating indicates the strongest capacity for timely payment of financial commitments relative to other issuers or obligations in the same country.
Fitch Ratings and S&P Ratings concluded that the County could see additional upgrades due to projected increases in the general fund reserve balances in 2021 through 2023 and if the County continues to pass structurally balanced budgets.
Over the course of the last year and a half, Suffolk County has taken several steps to mitigate the financial emergency caused by the COVID-19 pandemic and protect taxpayers. In addition to the ASRF referendum, the County enacted strict controls over discretionary expenditures, saving an estimated $20 million. Prior to the pandemic, the County worked to improve its finances by consolidating departments, working with labor unions to obtain significant healthcare expense savings, and implementing best practice financial reforms.
In 2012, Suffolk County was facing a $500 million operating deficit and a $200 million annual structural budget gap. As a result of a number of significant actions taken by County Executive Bellone to responsibly reverse the trends, Suffolk County has achieved structurally balanced budgets since 2019 and for the third year in a row, projects an operating surplus. The 2019 operating surplus in the general fund and police district was approximately $56.5 million, while the 2020 surplus was approximately $148.3 million.