Fitch Rates Nassau County, New York's $180MM GOs 'A+' & $110MM RANs 'F1+'

NEW YORK--(Business Wire)--
Fitch Ratings assigns an 'A+' rating to Nassau County, NY's (the
county) approximately $140 million general obligation (GO) bonds,
series 2008C, and $40 million GO refunding bonds, series 2008D. The
bonds are scheduled to price on June 18, 2008. Bond proceeds will be
used to finance various capital improvement projects and refund
certain outstanding bonds of the county. In addition, Fitch affirms
the 'A+' rating on the county's approximately $537 million in
outstanding GO bonds and Nassau Health Care Corporation's (NHCC)
approximately $296.2 million outstanding county-guaranteed bonds. The
Rating Outlook is Stable.

In addition, Fitch assigns an 'F1+' short-term rating to Nassau
County, NY's approximately $110 million GO revenue anticipation notes
(RANs), series 2008. The RANs are due April 15, 2009 and May 15, 2009.
The RANs are expected to price competitively on June 11, 2008.
Proceeds will be used to provide funds to meet a cash flow deficit
expected to occur during the period that the RANs are outstanding.

The 'F1+' rating on the county's RANs reflects adequate projected
coverage on the repayment date, satisfactory legal protections for
noteholders, significant levels of borrowable funds, and management's
demonstrated ability to respond quickly to budget shortfalls and
unexpected expenditure constraints. Projected coverage on both
repayment dates based on the combined projected 2009 cash flows of the
county's five major operating funds is strong at 5.61 times (x) in
April 2009 and 3.86x in May 2009. Including borrowable liquid
resources in excess of $150 million available from tobacco and sewer
and storm water funds, coverage levels increase to even stronger
levels of 8.22x and 6.81x in April and May, respectively.

The notes are general obligations of the county, for the payment
of which the county has pledged its faith and credit, payable from
sales tax revenues and any and all county revenue sources not
otherwise legally committed. County sales tax revenues are 42.2% of
total revenue of the county's major operating revenues with real
property taxes constituting the second largest source of revenue at
31.3% of total revenue. The amount of the RAN borrowing has increased
by $35 million compared to the $75 million issued in 2007.

The 'A+' rating on the county's outstanding GO bonds reflects the
marked improvement in the county's financial condition since its
fiscal crisis experienced at the beginning of the decade, resulting
from the institutionalization of strong financial management
practices. Other positive credit characteristics include a broad and
wealthy economic base, high income levels, and moderate debt levels
with above-average amortization rates. Credit concerns center on a
high fixed-cost burden, borne by all counties in the state, financial
exposure related to the NHCC, and a consistent trend of over-budgeting
sales tax receipts, which is the county's largest revenue source.
While sales tax revenue continues to demonstrate moderate growth
annually, Fitch believes the variance between budgeted revenue
assumptions and actual collections over the last several years is a
vulnerability.

Nassau County's 2006 estimated population of 1.3 million residents
has remained relatively unchanged since the beginning of the current
decade. The county's economy benefits from its proximity to the New
York City metropolitan area as well as its own broad employment base
and a diverse and wealthy tax base. The county's unemployment rate of
4.3% in January 2008 measured below that of the state (5.6%) and the
nation (4.8%). Wealth levels are well above average; in 2005 per
capita money income equaled 135% and 150% of the state and national
levels, respectively. The county is home to 13 hospitals including
North Shore-Long Island Jewish Health System, the third largest
non-profit secular health system in the country, employing over
31,000, and the Winthrop S. Nassau University Health System.

Fitch believes that the county's 2008 budget and 2008-2011
multi-year financial plan (MYP) are less conservative than in past
years, exhibiting continued reliance on speculative cost-saving
measures, many of which require state legislative approval. Further,
the out-years of the MYP rely on the assumption that recurring
revenues will be raised through property tax increases, which the
county has deferred for the last several years. Fitch notes, however,
that the county has been successful in closing the forecasted budget
gaps in each MYP submitted since fiscal 2002, primarily through much
improved financial management, achieving labor concessions, and a
state-imposed cap on annual growth in Medicaid expenses. The county
expects to end fiscal 2007 with an operating surplus across all major
operating funds of approximately $23.8 million of which the county
will reserve $10 million for 2008 tax refunds.

Growth in sales tax receipts for 2007 over the prior year stands
at 2.1%, notably lower than the 3.4% assumption included in the
adopted 2007 budget, which results in a shortfall of approximately
$18.961 million against the original 2007 budget and a shortfall of
approximately $13.812 million against the 2007 budget as modified.
While Fitch believes management has been proactive in addressing the
shortfall, the 2.5% growth assumption included in the fiscal 2008
budget could present another negative variance given the recent trend
in sales tax performance. The county reports that growth in sales tax
revenues through May 2008 is 2.2% over the same period in 2007. The
county has proposed not replacing 150 positions and limiting all but
essential purchases to offset any shortfall as well as implementing
other potential cost saving measures.

The county's debt burden, including the outstanding debt of the
Nassau County Interim Finance Authority (NIFA) and the county's
underlying municipalities and school districts, is moderate at $6,555
per capita or 4.26% of market value. The county's 2007-2011 capital
improvement plan totals $786 million and is expected to be funded
primarily through annual county debt issuance. Debt amortization is a
credit strength, with 66% of principal retired within 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.

Fitch Ratings, New York
Ann G. Flynn, 212-908-9152
Christopher Hessenthaler, 212-908-0773
or
Media Relations:
Christopher Kimble, 212-908-0226

Copyright Business Wire 2008