Correction: Fitch Rates Suffolk County, New York's Public Improv Bonds 'A+' and TANs 'F1+'; Positive Outlook.

NEW YORK -- (This is an amended version of the release that went out on Oct. 24, 2005; it now references the correct series name throughout.)

Fitch Ratings assigns an underlying 'A+' rating to Suffolk County, New York's (the county) $80,275,000 public improvement serial bonds, 2005 Series B and an 'F1+' to $55,000,000 tax anticipation notes (TANs), 2005 (Series II). The current offerings are scheduled for competitive bids on Oct. 27. The bonds are expected to carry a municipal bond insurance policy. The TANs, secured by the county's full faith and credit, will be payable from the collection of portions of unpaid real property taxes or assessments within Suffolk County for fiscal years 2002-2005. Series B bond proceeds will fund various capital improvement projects, including land acquisition, court house renovations, and sewer district improvements. At this time, Fitch affirms the 'A+' rating on the county's approximately $675 million outstanding general obligation (GO) bonds. The Rating Outlook is Positive.

The underlying 'A+' rating is based on Suffolk County's broad and wealthy economic base along with a moderate debt profile. The county continues to demonstrate a willingness to take strong actions to achieve budgetary balance and maintain reserves. The Positive Rating Outlook reflects management's prudent budgetary actions in recent years and increased financial flexibility beyond the general fund balance. Any rating improvement will be dependent on positive audited fiscal 2005 year-end results and the adoption of a fiscal 2006 budget that will preserve the county's financial position despite its reliance on economically sensitive revenue and budgetary pressures stemming from increased debt service, pension contributions, and social service and health insurance expenses.

The 'F1+' rating on the TANs reflects the satisfactory coverage of TAN repayment and the adequate level of borrowable funds. The county issues TANs at this time every year to offset deficiencies in property tax collections. While the repayment structure does not require a set aside, a separate restricted bank account has been established into which delinquent tax collections for such years will be deposited prior to the September 2006 repayment. The 2006 projections of delinquent tax receipts and accumulated balances by September across the major funds cover TAN principal and interest approximately 1.9 times (x).

Encompassing eastern Long Island, Suffolk County's economy benefits from its proximity to the New York City metropolitan area and its own broad employment base. Suffolk is one of the largest counties in the nation, with a population of approximately 1.47 million. The local economy is diverse, with numerous corporate and regional headquarters located there. While residential employment data for both Suffolk County and the Nassau County metropolitan statistical area (MSA) has risen, it appears to have stabilized and the 2004 unemployment rate of 4.4% remains well below state and national levels. Income levels in Suffolk County are on par with those of the state but are considerably above the national average.

The county's conservative financial management practices have helped maintain sound financial margins despite ongoing pressure from social service spending and reliance on sales tax revenue. Audited 2004 results show a $143.5 million unreserved general and tax stabilization fund balance, representing a solid 13.3% of spending. Estimated 2005 results show a slight $1.8 million decline in general fund balance due to sluggish sales tax growth. Overall reserves are expected to grow as the county added to the pension, medical plan and tax stabilization fund reserves. The 2006 proposed budget includes a 2.5% increase in the police district tax levy. The budget also includes scaled-back sales tax projections due to a 1% reduction on energy sales tax for the six-month period from December 1 to May 31. The county benefits from state legislative actions in the areas of pension funding, the reinstatement of a sales tax on clothing, and a Medicaid spending cap.

Debt ratios are low to moderate given the county's growing tax base and curtailed long-term borrowing. Overall debt is $1,761 per capita and 1.2% of market value. The county's $550 million capital improvement program (CIP) through 2008 focuses on utility infrastructure, transportation, and public safety, to be financed primarily with bond proceeds and federal transportation-related grants. Series B bond proceeds will fund land acquisition and preservation, district court renovations, and sewer district improvements. Amortization is rapid with 83% of debt retired in 10 years.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, 'www.fitchratings.com'. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.