Jul 27, 2014
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Moody’s Downgrades Rockland’s Bond Rating

County downgraded to Baa3 from A3 and outlook reivsed to negative due to lack of introduction of home rule legislation in state senate.

Moody’s Downgrades Rockland’s Bond Rating Moody’s Downgrades Rockland’s Bond Rating Moody’s Downgrades Rockland’s Bond Rating Moody’s Downgrades Rockland’s Bond Rating Moody’s Downgrades Rockland’s Bond Rating

 

Moody’s Investor’s Service downgraded Rockland County’s bond rating to Baa3 from A3 on Thursday and revised its outlook to negative. The county has $240 million of debt. Moody’s noted several of Rockland's financial difficulties in its explanation of the ratings change, the lack of state approval for possible fiscal remedies along with the absence of union concessions. The county executive described Moody’s action as premature, since county leaders had met and discussed development of a contingency plan.

Moody’s explained its ratings rationale in a release. 

The downgrade of the long- and short-term ratings reflects a significant budget gap of more than $40 million in the county's current year, placing heavy pressure on its financial operations and liquidity. The county had developed a plan to close this gap, but has failed to gain state approval for various revenue enhancements, including an increase in sales and other taxes, and has not garnered concessions from collective bargaining groups that would have resulted in expenditure savings. The county is also awaiting state approval to issue $80 million in deficit reduction bonds. Management has also failed to either sell or make financial improvements to the county-owned nursing home, which depends on operating support from the county.

County Executive C. Scott Vanderhoef was critical of the ratings agency and said it acted too quickly on the news that State Senator David Carlucci decided not to introduce that if approved would allow the county to raise the sales tax.

“We have been working diligently with leadership in the County Legislature to come up with a bi-partisan contingency plan,” said Vanderhoef.  “It’s unfortunate that Moody’s did not wait to review our final contingency plan before downgrading our bond rating. Furthermore, the report recommending actions we can take with our County hospital and nursing home are being presented to the County Legislature on Tuesday night.”

County Communications Director Ron Levine said the county executive met with Legislators Harriet Cornell, Ilan Schoenberger, Alden Wolfe, Frank Sparaco and Michael Grant on Monday to discuss possible options and a contingency plan.  The county has an $80 million budget deficit.

Levine said the contingency plan would be a bi-partisan proposal and require “serious actions.” He expects it will be introduced at Tuesday’s legislative meeting. 

“In very short order some of these things will be agreed to,” he said. “It will probably please very few people. Obviously there will be layoffs.”

Levine could not provide specifics but said options were presented that could make the number of layoffs larger or smaller than the 544 amount first proposed by Vanderhoef in October.

Most county employees belong to the CSEA, which is also involved in the ongoing discussions.

CSEA Southern Region President Billy Riccaldo released a statement asking Carlucci to reconsider his decision.

"We are calling on Sen. David Carlucci to join with Assemblymembers Ellen Jaffee and Annie Rabbitt in sponsoring legislation that would allow Rockland to stabilize its financial situation with the least financial impact on county taxpayers. If this bill is not passed through Albany, we will see devastating cuts in services, a spike in foreclosures and an increased demand for county assistance. It's time for Sen. Carlucci to step up and do the right thing for his constituents."

Carlucci characterized the county’s government as “a financial disaster” and described the current situation as having been “created through years of fiscal irresponsibility.”

"County Executive Scott Vanderhoef for too long has relied upon faulty numbers and accounting gimmicks,” said Carlucci. “In fact, from 2005 to 2010, the county increased spending by 20 percent, 67 percent higher than the rate of inflation. For at least the last 6 years, the County Executive has continued to propose budgets with over-inflated sales tax revenues, adding to Rockland’s financial problems. Now, Scott Vanderhoef wants to make the root of the problem--an overly burdensome sales tax--part of the solution.

Vanderhoef held out hope the state legislature could still help the county. 

“While an increase in the sales tax may no longer be on the table, we remain hopeful that state lawmakers will come up with a plan to help municipalities across New York that are struggling,” said Vanderhoef.

He also spoke about Carlucci’s lack of support.

“We regret that State Senator Carlucci was unwilling to fight for the financial stability of Rockland County by passing the home rule legislation necessary for Rockland to raise its sales tax. Moody’s downgrade is a direct result of his unwillingness to work with us to close the budget gap.”

Moody’s listed three possibilities that could make the county’s rating go up.

- Proven ability to access the capital markets for cash flow and deficit funding notes.

- Implementation of realistic revenue enhancements and expenditure reductions to close the significant gap.

- Clear and decisive plans to reduce the county's liability to the nursing homes annual losses.

The county legislature meets Tuesday night at 7 p.m. when the report on the Summit Park Hospital & Nursing Home and budget contingency plan will be presented.

 

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