KBRA Assigns AA Rating to the County of Erie, New York General Obligation Bonds, Consisting of Public Improvement Serial Bonds, Series 2026A and Refunding Serial Bonds, Series 2026B; The Outlook is Stable

KBRA assigns a long-term rating of AA to the County of Erie, NY General Obligation Bonds, consisting of Public Improvement Serial Bonds, Series 2026A and Refunding Serial Bonds, Series 2026 B. Concurrently, KBRA affirms the long-term rating of AA on outstanding General Obligation Bonds of the County. The Outlook on all obligations is Stable.

The rating reflects Erie County, New York’s strong fiscal and financial management framework, manageable debt and fixed cost burden, fully funded pensions and prudent reserve maintenance. Resilient revenue performance and careful spending controls continue to drive favorable operating results. Ongoing economic diversification and solid tax base growth further support the rating.

Factors counterbalancing the abovementioned strengths include the concentration risk of economically sensitive sales tax receipts, which comprise more than half of General Fund revenues, and volatile mandated spending requirements associated with the County’s relationship with the Erie County Medical Center Corporation (“ECMCC”), a public benefit corporation and component unit of the County. ECMCC exposure is becoming more correlated with federal and State funding risk associated with the provisions of the One Big Beautiful Bill (“H.R.1”), as are spending pressures related to social services. Litigation risk and correctional facility contingent liability exposure have also become more prominent in the past year.

Key Credit Considerations

The rating actions reflect the following key credit considerations:

Credit Positives

• Record of stable general fund unassigned fund balance, maintained above the Charter requirement of 5% of prior year general fund expenditures.
• Diversifying resource base that has shown resiliency during periods of economic stress.
• Strong fiscal management controls, sound pension funding metrics, and the maintenance of reserves contribute to expenditure flexibility and mitigate IGT volatility.

Credit Challenges

• Large projected budget gaps equating to approximately 4% of budgeted expenditures have emerged for fiscal years 2027 through 2029, reflecting management's worst-case estimates of enacted federal funding reductions and other mandated expenditure pressures.
• The IGT amount is outside of the County’s control. Supplemental Medicaid and ECMCC support requirements above the Medicaid cap may be further pressured by federal and State healthcare changes.
• Limited property-tax revenue flexibility exists, notwithstanding strong tax-base growth. General Fund is dependent on economically sensitive sales tax receipts.
• Material unresolved litigation and correctional facility liability are an evolving credit exposure.

Rating Sensitivities

For Upgrade

• Improved internal liquidity and increased revenue-raising flexibility.
• Continued maintenance of available reserves above required levels.

For Downgrade

• Deterioration in liquidity.
• Inability to achieve structural budgetary balance.
• Significant decline in unassigned General Fund balance and/or reserves.

To access ratings and relevant documents, click here.

Methodology

• Public Finance: U.S. Local Government General Obligation Rating Methodology

Disclosures

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA), one of the major credit rating agencies (CRA), is a full-service CRA registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a Designated Rating Organization (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan’s Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.

Doc ID: 1016187

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