Moody's Investors Service on Tuesday upgraded the general obligation bonds of Nassau County, N.Y., signaling the near end of a fiscal crisis that forced the county's bond rating to the depths of Moody's investment grade categories.

Moody's raised its rating on Nassau debt to Baa1 from Baa, its lowest investment-grade assessment. The move affects $250 million of uninsured county debt.

In October 1992, Moody's cut Nassau's bond rating to Baa from A. The rating agency cited a political impasse between Republican and Democratic members of the county government that stalled a much needed deficit bailout plan.

The plan, ultimately approved by the county's board of supervisors, called for the sale of $65 million of deficit bonds to help cure the county's fiscal 1992 budget woes.

On Tuesday, Nassau earned back half of what it lost almost two years ago. In a press release, Moody's said, "The fiscal crisis that caused a sharp deterioration of the county's credit position has receded."

The county cut its general fund deficit from its 1992 level of $120 million to $18 million in 1993, Moody's also said.

The rating agency said Nassau's fiscal 1994 budget, which went into effect Jan. 1, contains "a number of risks that may impede the county's progress toward fiscal balance," including uncertain sales tax collections and revenues from the sale of land.

Still, Moody's noted that "county finances have recently improved after four years of decline."

Contributing to the upgrade is the near absence of the political bickering that forced the count to delay implementing its 1992 deficit bailout plan, said Michael Johnston, a vice president at Moody's.

The plan, proposed by Republican county executive Thomas S. Gulotta, called for the sale of deficit bonds and the creation of a 1% mortgage recording tax.

However, three Democratic members of the town's legislative body, the board of supervisors, refused to approve the plan until nearly a year later, programming Moody's to cut its credit assessment of county debt.

"At the time, the concern we had was that the county was operating in an extremely uncertain environment," Johnston said. "It got to the point where daily decisions in the operations of government were in question.

The county's treasurer, Santa Rozzi, did not return a telephone call yesterday for comment.

Nassau is also rated A-minus by Standard & Poor's Corp.

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