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MOODY'S CONFIRMS NASSAU COUNTY'S 'A' RATING BUT WARNS OF CRITICAL JUNCTURE IN CREDIT POSITION

 MOODY'S CONFIRMS NASSAU COUNTY'S 'A' RATING
 BUT WARNS OF CRITICAL JUNCTURE IN CREDIT POSITION
 NEW YORK, July 17 /PRNewswire/ -- Effective today, Moody's Investors Service confirmed the 'A' rating on Nassau County, New York's general obligation bonds. Despite the county's vast taxable resources, it remains in the midst of its most serious financial stress in years. In January of this year in the face of a significant weakening of the regional economy, consequent elimination of available reserves, and uncertainty over the county's ability to operate within the limits of its adopted 1992 fiscal year budget, the county's rating was lowered from A1 to A. The county is now approaching a second, perhaps even more significant, challenge to its long term credit position. Unable to achieve its budget objectives and incapable of addressing the county's dramatic weakening of financial performance within the budget year, the county is now seeking authorization from the state to issue deficit funding bonds. Absent the approval of both the governor and the state legislature for issuing the deficit funding bonds the county would be required to take nearly draconian steps to insure budget balance (ie. massive additional layoffs, large property tax increases and/or dramatic program reductions). The ability to the county to achieve these steps in the current economic and political environment is uncertain at best. Even if the deficit funding is approved (together with a 1 percent county mortgage recording tax which has also been requested), the county faces the significant challenge of implementing its budget balancing plan and insuring a return to a structurally balanced budget.
 To date, the county has taken a variety of steps to gain control over the budget including a reduction of almost 1,700 personnel (11 percent of the work force), program reductions, fee increases, etc. County officials have also indicated a commitment to taking whatever steps are necessary to return to fiscal stability, including a willingness to consider property tax increases in 1993 if necessary. The successful implementation of the county's gap closing plan relies almost completely on their willingness to make difficult tax or spending decisions if needed. Any indication of further deterioration of the current year financial position, or an unwillingness of the county to implement the steps necessary to insure balance places the county's long term credit position in jeopardy. The next important evaluative point for Nassau County's credit rating is likely to be its deficit funding issue (if it is approved) within the next two months.
 The concerns over the county's long term credit position are particularly unusual given the massive tax base of the county, extraordinary affluence of its population and weakened but still substantial economic base. These factors remain strong and continue to underly the county's average credit rating.
 -0- 7/17/92
 /CONTACT: Marci Herzlinger, 212-553-7166, or Michael Johnston, 212-553-7810, both of Moody's/ CO: ST: New York IN: SU: RTG


AH-OS -- NY064 -- 0496 07/17/92 23:36 EDT
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Publication:PR Newswire
Date:Jul 17, 1992
Words:488
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Rating agencies give Nassau County an "A" for financial recovery.

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