Two Wall Street bond rating agencies have improved their outlook for some Suffolk County debt, citing an influx of more than $570 million in federal pandemic aid that has helped stabilize the county’s finances.
S&P Global and Fitch Ratings affirmed BBB+ ratings on the $98.9 million Suffolk General Public Improvement Bond, which funds capital projects.
S&P raised its outlook to positive, while Fitch revised its outlook to stable, according to reports published on July 26.
The outlook generally indicates the direction in which bond ratings are likely to move.
Factors such as increased federal aid, improved cash flow, low debt burden, relatively high coronavirus vaccination rates and county budget measures could help reduce economic disruption linked to the pandemic in Suffolk in the near future, the agencies said.
Fitch also upgraded Suffolk’s rating on $80 million of short-term borrowing to the highest rating of F1, from F2.
“This positive development is a direct result of our fiscally responsible approach to budgeting, even during this unprecedented pandemic,” Suffolk County Executive Steve Bellone said in a statement.
The county is expected to receive $571.9 million in federal assistance between 2020 and 2022 through the CARES Act and the US Rescue Plan’s federal coronavirus relief and stimulus programs.
The county has cut spending and drawn nearly $60 million from a sewer assessment stabilization reserve fund, Fitch said.
Through an election referendum, Suffolk also eliminated the requirement to repay more than $154 million to the reserve fund, according to Fitch.
These actions provide “the county with the ability to rebalance its financial operations to improve the county’s overall financial resilience,” the Fitch report said.
The agency noted Suffolk’s meager reserves, rising labor costs and reliance on one-time revenues and sales taxes in the past.
The new outlook could improve the interest rates the county will have to pay on its next borrowing, said Suffolk Comptroller John M. Kennedy Jr., a Republican.
The revised forecast also shows “the county is in a much stronger position than we’ve been in for a few years there,” Legislative Speaker Robert Calarco (D-Patchogue) said.
Cash flow has improved as Suffolk will not need to issue short-term revenue anticipation notes to pay bills in 2021, according to Fitch and S&P Global.
On Friday, Bellona, a Democrat, introduced a $307 million capital budget for 2022-24 that will fund $21 million in projects using cash instead of borrowing.
The proposed capital budget, if approved by the county legislature, would use nearly $100 million in federal and state aid for sewer, water quality, economic development and public safety, Bellona’s office said.