Fitch gave Suffolk County, located on the eastern half of Long Island, a negative rating outlook in the downgrade, which affected about $1.3 billion of general obligation bonds, and warned the county could be downgraded again.

"Fitch will continue to closely monitor the county's progress and if necessary take further downward rating action if some degree of progress is not obtained in the medium term," the credit rating agency said in a statement.

Suffolk County's Democratic County Executive Steve Bellone, who took office in January, declared a fiscal emergency in March after a panel he commissioned estimated the county faces a three-year $530 million deficit.

The emergency declaration gave Bellone the ability to make 10 percent spending cuts. Suffolk's financial problems are at odds with its reputation as a summer playground for the world's wealthy and its high median household income, which at $84,506, is well above the national average of $51,413.

Fitch cited the fiscal emergency along with other problems, including aggressive sales tax estimates and rising fixed costs, which it said had significantly reduced reserves.

"The general obligation rating downgrade to A-plus from AA- minus reflects the county's diminished liquidity and financial flexibility," Fitch said.

Suffolk's financial pressures this year forced it to sell its first revenue anticipation notes in 20 years, Fitch said, adding, it expects more cash flow borrowing "for the foreseeable future."

Bellone has achieved $100 million of savings, with most of that, some $66.8 million, derived by amortizing a 2013 pension payment.

Bellone also is seeking concessions from public unions, after sending lay off notices to 315 employees that are effective in July, the credit agency said.

Other potential savings could come from the sale-leaseback of county facilities and finding a long-term strategy for a money-losing county nursing home, it added.

The credit agency also cut the rating on $520 million of tax anticipation notes to F1 from F1-plus, saying the county's cash margins had narrowed.