N.Y.’s Suffolk County Cut by Fitch as Sandy Hurts RevenueBrian Chappatta
New York’s Suffolk County, home of eastern Long Island’s Hamptons beach towns, had $1.4 billion of general-obligation bonds cut to A from A+ by Fitch Ratings as the region recovers from Hurricane Sandy.
County Executive Steve Bellone declared a fiscal emergency a year ago after the county’s spending plan ended out of balance for the first time in two decades. The municipality’s budget office is projecting a $51 million shortfall in 2013 on lower sales- and property-tax revenue last year because of Sandy, according to a report from New York-based Fitch.
“Projected results for 2012 are worse than budgeted, and the 2013 budget projects a deficit,” Fitch analyst Karen Wagner wrote. “The potential negative consequences from Super Storm Sandy will continue to challenge the county’s ability to restore structural balance and improve reserves to an adequate level.”
Fitch’s A rating is five steps below AAA, and the company has a negative outlook on the debt, meaning another downgrade may be made. Standard & Poor’s and Moody’s Investors Service have the county at four levels below their top marks.
S&P revised its outlook for the county to negative from stable today, hours after the Fitch move, citing a “persistent structural imbalance,” including the effects of “one-time events.” The outlook signifies a one-in-three chance that the New York-based company will lower its rating in the next two years, S&P said.
One of Suffolk County’s strengths is its wealthy tax base, resulting in a manageable debt burden, Fitch and S&P said. Hedge fund billionaires John Paulson and George Soros are among those who have bought houses on a 60-mile (95-kilometer) stretch from Bellport to the eastern tip of Long Island.
Sandy struck the Northeast on Oct. 29, packing hurricane-force winds and driving flood waters that left more than 125 dead in 10 states. The storm inundated New York City’s subway system and ravaged shore communities from New Jersey’s Atlantic City to Bridgeport, Connecticut.