Moody's Investors Service on Friday confirmed the A rating on Nassau County, N.Y.'s general obligation bonds, but warned that the county's credit position remains in danger.
The rating came in response to today's planned competitive sale of $107.6 million of GO bonds with maturities ranging from 1993 to 2011.
The county will use proceed to roll over existing debt and for capital projects. County officials say the bond issue will qualify for insurance from AMBAC Indemnity Corp., Financial Guaranty Insurance Co., and Municipal Bond Assurance Corp.
The credit confirmation also comes at a time when Nassau County is seeking legislature approval to issue up to $71 million in five-year deficit bonds to help cover its projected $131 million fiscal 1992 budget shortfall. As part of the gap-closing plan, the county is asking the New York State Legislature to approve a measure that would double its mortgage tax to 2%.
In publishing its rating, Moody's said in a press release that despite the county's budget problems, "concerns over [its] long-term credit position are particularly unusual." The rating company cited the county's "massive tax base" and the "extraordinary affluence of its population and weakened but still substantial economies base."
Moody's added that "these of factors remain strong and continue to underlie the county's average credit rating."
However, Moody's also warned that this affluent suburb of New York City still faces a substantial credit challenge. The agency said in a press release the county's financial plan is crucial to the rating. Included are proposals for issuing deficit bonds and increasing the mortgage tax.
The release also says the county must "make difficult tax or spending decisions if needed."
Michael L. Johnston, vice president and manager of Mid-Atlantic ratings for Moody's, said the agency does not promoted deficit bonding. but in Nassau's case the transaction is critical.
"The county's financial position is extremely tight," Mr. Johnston added. "The county needs some transition so it can achieve structural balance."
In a statement, County Executive Thomas S. Gulotta said the Moody's rating reaffirmed the needs for the state to pass the deficit bond plans. Nassau officials have blamed the county's economic plight on the recession and a dramatic increase in state mandates. Nassau is not rated by either Fitch Investors Service or Standard & Poor's Corp.
The state legislature ended its 1992 session two weeks ago deadlocked over a number of important bonding issues, including Nassau deficit-financing plans. These Issues include Gov. Mario M. Cuomo's $800 million jobs-producing bond act, Suffolk County's proposal to issue $91 million on deficit bonds, and New York City's authority to issue debt through negotiated sale.
On Friday, Senate Majority Leader Ralph J. Marino, R-Muttontown, Assembly Speaker Saul Weprin, D-Queens, and Mr. Cuomo, a Democrat, continued to meet in an attempt to resolve their differences. If and when a compromise is reached, sources say the legislature will meet in a special session the week of July 27 so lawmakers can vote on the remaining issues.
Mr. Weprin has said he will not commit the Assembly to the Nassau or the Suffolk deficit-bond bailouts with these Republican-controlled counties establishing some independent financial oversight, with power to review budgets and approve debt sales.
Mr. Marino, for his part, has refused to approve the governor's $800 million bond act and the city's negotiated sales authority unless the Assembly agrees to the Nassau and Suffolk bills.
All three parties planned to meet over the weekend to wrap up their unfinished business. A source with knowledge of the meetings said some progress has been made in the negotiations, and lawmakers may come up with a compromise that would reduce the level of oversight on Nassau and Suffolk counties.