Moody’s Investors Service has shifted the outlook on Westchester County bonds to “negative” in light of the “deterioration” of its financial position.
While Moody’s affirmed Westchester’s Aa1 bond rating, a step below the top Aaa rating, Moody’s revised the outlook for the county from stable to negative on Oct. 18 to reflect what it described as “continued deterioration of (its) financial position resulting from large one-time expenses over the past two years.”
Despite the negative outlook, the report noted the county still has a large, diversified tax base in the wealthy suburbs of New York City. It also said the county’s financial position “is likely to improve in the near-term given strong financial management.”
County Executive George Latimer called the negative outlook “certainly no surprise,” in a statement released Thursday following the ratings announcement.
“We have known for some time now that the county is in serious financial stress,” Latimer said. “We are taking steps every day to improve our footing, but the road ahead will be long.”
Earlier this month, the county’s Board of Legislators and Latimer reached a labor agreement with its largest union, the Civil Service Employees Association. The deal required the county to pay back more than $37 million in retroactive pay increases this year, though federal and state reimbursements are expected to reduce that cost by $9.3 million.
Latimer noted that the Moody’s report found with all the union contracts settled (a deal was also reached this month with a union representing investigators in the district attorney’s office) and all retroactive payments due by Dec. 31, “reserves are expected to improve in the near-term given conservative budget management and revenue enhancements.”
The county’s outlook could be upgraded, Moody’s said, if it replenishes its reserve funds to historical levels and stabilizes its financial position in 2019.
“The county has tough times ahead, and we have to make hard decisions to right the ship,” Latimer said. He said he hopes to have the county reach triple-A bond rating before he leaves office.