Westchester County, New York, wins S&P upgrade to AAA

Westchester County is ringing in the new year with a new AAA rating from S&P Global Ratings. 

S&P’s analysts cited growth in the county’s reserves, conservative budgeting and strong sales tax revenue as the reason for Tuesday’s upgrade from AA-plus. 

The new AAA rating will help the county pitch its upcoming $129 million GO deal. The county also kept its AAA rating from Fitch Ratings.

“Maintaining a AAA rating from Fitch is a significant accomplishment and a reflection of our commitment to fiscal responsibility,” County Executive Ken Jenkins said in a statement. “This rating not only demonstrates our financial stewardship, but also ensures we can continue investing in programs and services. We are here to say you can do both – you can invest in the County’s financial health and serve the needs of residents.”

The upcoming GO deal will have three series. The third series, $29.9 million maturing in 2037, will be federally taxable.

Westchester was downgraded by S&P in 2018 when it drew too heavily on its reserves, analyst Lauren Freire said. 

S&P’s 2018 rating report attributed the downgrade to “the county’s narrow financial reserves at fiscal year-end 2017 and our expectation that flexibility and liquidity will further weaken at fiscal year-end 2018, primarily because retroactive salary increases were paid to union members of the Civil Service Employee Assn. from fund balance in 2018.”

Today, the county’s reserves have recovered to $527.5 million, far above its low of $64.9 million in 2018. 

S&P will continue to monitor Westchester’s revenue collections and the changing state mandate environment, Freire said. However, the county, home to just shy of 1 million residents, is well positioned to avoid many of the challenges facing municipalities in the coming years. 

Westchester didn’t use American Rescue Plan Act funds for recurring expenditures, so it will not have a fiscal cliff, and its revenue collections are strong, Freire said. She also noted the county uses conservative revenue projections in its budgeting, and its reserves are large enough to act as a cushion in an inflationary environment. 

“We do feel that Westchester has positioned themselves to be able to weather some of those uncertainties,” Freire said, “based on the amount of reserves that they have and the cushion that they built over these last couple of years.”

Fitch has rated Westchester AAA since November 2023. Moody’s Ratings rates the county Aa1.