Suffolk County nabs Moody’s upgrade

Moody’s Ratings upgraded Suffolk County, New York, two notches citing the county’s improved fiscal position, sales tax growth and operational oversight. 

Moody’s is the third rating agency to upgrade Suffolk this year, after Fitch Ratings and S&P Global Ratings upgraded the Long Island county. The county plans to sell refunding bonds and tax anticipation notes later this week. 

Moody’s upgraded Suffolk to A1 from A3 and left the county’s outlook positive. Earlier this year, Fitch upgraded the county to A and S&P raised its rating to AA-minus. 

“The A1 reflects a reserve position that continues to improve after years of negative fund balance, cash-flow borrowing to support operations and overly optimistic budgetary assumptions,” Moody’s rating report said. 

In October, Suffolk sold $164.4 million of bonds in a competitive issuance. The deal was the county’s first issuance in two years and received a dozen bids worth a total of $1.97 billion. 

Four years ago, the county was in the opposite position. In 2020, the Suffolk was downgraded by all three rating agencies, to BBB-plus by Fitch and S&P and Baa2 by Moody’s. Suffolk had been struggling with budget gaps for years, and COVID-era hits to revenue badly damaged the county’s finances. 

Today’s Suffolk has reversed its fortunes, but it’s facing operational headwinds, according to the Moody’s report. 

“Salaries and benefits are forecast to increase substantially in 2025 along with other inflationary cost increases,” the report said. “Sales tax growth has slowed and is estimated to come in with a growth rate of just 0.17% in 2024, well below budget. Management has budgeted for a 2.5% increase in sales tax revenue in 2025, which may be overly optimistic without an acceleration of underlying economic growth.”