KBRA Assigns AA+ Rating and Stable Outlook to County of Rockland, NY General Obligation Bonds
22 Sep 2023 | New York
KBRA assigns a AA+ long-term rating to Rockland County, NY's (“the County’s”) general obligation bonds outstanding. The rating reflects the County’s six-year trend of balanced operations and dramatically improved liquidity and reserves, the result of the resilient performance of the mostly economically sensitive revenue base, and management’s conservative budgeting and disciplined spending practices. The rating also considers the sound potential of the County’s residential tax base to absorb a somewhat elevated fixed cost burden.
The Bonds are general obligations of the County backed by its faith and credit pledge, subject to a statutory restriction on the annual real property tax levy increase equal to the lesser of 2% or the annual increase in CPI (the Tax Levy Limitation Law). A 60% vote of the County Legislature is required to override the limitation, which may be considered annually.
Key Credit Considerations
The rating was assigned because of the following key credit considerations:
Credit Positives
- Solid General Fund revenue performance, spending controls, and conservative budgeting practices have contributed to structural budgetary balance, with operating surpluses realized in each of the last six fiscal years.
- The County has amassed substantial fund balance which has greatly improved expenditure flexibility and cushions against economic downturn.
- The County's resource base and economic underpinnings afford favorable prospects for continued revenue generating ability.
Credit Challenges
- Sales tax collections, which comprise roughly 58% of General Fund revenue, are economically sensitive.
- Expenditures could increase if the County is required to assume responsibilities for sheltering asylum seekers.
Rating Sensitivities
For Upgrade:
- Continued trend of favorable operating performance supporting a robust financial reserve and liquidity profile.
- Improved growth in property tax revenues, within the constraints of the Tax Levy Limitation Law, that reduces the County’s reliance on volatile Sales Tax revenues.
For Downgrade:
- Difficulty in navigating recessionary pressures given reliance on sales tax revenues and State statutory limitations on property tax growth.
- A drawdown in unassigned fund balance below the County’s targeted level of 10% of General Fund operating expenditures, or evidence of sustained deterioration in the County’s liquidity position.
- Significant, unbudgeted expenditures that impact structural budgetary balance.
- Failure to continue to follow the conservative budgeting and expenditure policies adopted during the period of State oversight.
To access rating and relevant documents, click here.
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