Suffolk's bond rating improved. Here's why it matters to taxpayers

Suffolk County on Tuesday received a credit rating increase from Fitch, one of the three major credit rating agencies, which cited better operating efficiencies and more conservative revenue forecasts in its report. 

Suffolk’s rating has increased from A- to A, which is high credit quality, but still two rungs below the top rating of AAA. That means Suffolk’s ability to pay back debt on things like infrastructure projects, vehicles or civil liabilities is strong, but could be impacted if there's an economic downturn, according to the agency.

Here’s what that news means to taxpayers.

How does a credit rating affect the public?

Suffolk County Executive Edward P. Romaine has said he prioritizes improving the county’s credit rating, an assessment of a municipality's finances which affects interest rates when it borrows, or bonds, for projects.

"This sets the stage for future upgrades as we continue to budget responsibly while we ‘rightsize’ government and deliver the services expected by the residents of Suffolk County," Romaine said in a statement Wednesday. "The rating increase will save millions of taxpayer dollars over the long-term based on the County’s newfound ability to sell bonds at a decreased interest rate."

Interest rate savings free up money for other county spending on salaries, forward-facing services and more.

On Friday, Romaine released a $4 billion proposed annual budget that raises spending by about 3.7% from the current $3.9 billion while minimally cutting into Suffolk’s reserves. The spending plan, which requires approval by the Suffolk Legislature, would raise property taxes for those in the five western towns by about $49 per year and about $4.60 for those in the five eastern towns.

Romaine said he opted not to tap reserves as a strategy to improve the county’s overall financial health.

Fitch notes that Suffolk has kept its available cash reserves at about 15% of its total spending, which helped its rating. If the fund balances fell to below 2.5% of spending, the rating could decrease, Fitch said.

"We put a lot of emphasis on the size of reserves, which would be cash that they have available in the event there are downturns in the economy," Fitch ratings analyst Kevin Dolan told Newsday.

What factors impact a credit rating?

Fitch notes Suffolk’s regional and economic indicators, including the income, unemployment rate and educational levels of its residents, remain strong.

The county’s finances have improved in recent years due in part to higher than anticipated revenue during the pandemic years as well as an infusion of about $500 million in federal pandemic-related aid. But the agency notes that the county upgraded its budgetary practices, as well.

"They're in a better position financially to absorb future downturns than they were, say, five years ago," Dolan said.

The lowest Fitch has rated Suffolk was BBB+ in March 2020, a year when the county was facing an $800 million shortfall and potential staffing and service cuts amid the pandemic-related shutdown.

When was the last time Suffolk received a credit rating upgrade?

Fitch last upgraded Suffolk’s credit rating in August 2022, to A- from BBB+.

Standard & Poor’s last upgraded Suffolk’s rating in February, to AA- from A+ with a stable outlook. Moody’s Investors Service upgraded Suffolk to A3 from Baa2 in February 2023.

By Vera Chinese

vera.chinese@newsday.com@VeraChinese

Vera Chinese covers Suffolk County government and politics. She joined Newsday in 2017 after working as an editor for the East End lifestyle publication northforker and a general assignment reporter for the New York Daily News.