The ratings downgrade reflects Fitch's concern that the city's financial resilience is merely adequate and that its budgeted revenue assumptions are overly optimistic. That combination, according to Fitch, has the potential to further erode the city's financial flexibility in the midst of the economic downturn that was brought on by the Covid-19 pandemic.
As a result, the agency said it anticipates that
"Fitch believes that the city's fiscal 2021 budget and revenue assumptions are overly optimistic and leave the city vulnerable to financial pressures in the event that the federal government does not appropriate additional federal disaster relief or the city is unable to issue deficit bonds pending state approval," the Fitch analysts wrote.
The lower "A" credit rating takes into account slow revenue growth prospects, adequate reserve balances and limited expenditure flexibility. Fitch said city leaders do have the independent legal ability to increase revenues, but have been using one-time budget actions, including the sale of city assets.
"The city's financial resilience has weakened with significant declines in available general fund reserves following operating deficits in fiscal 2016 through fiscal 2018," the Fitch report noted.
The city's low long-term liability burden for debt and pensions continues to support the "A" rating, Fitch added.
While the lower rating continues to leave
"Our economy was strong, and city revenues were projected to grow," Brown said.
"I intend to meet with representatives from all the ratings agencies over the coming months to ensure that the city's financial and economic situation is clearly communicated to them and continue to make the case that
The Fitch analysts noted in the report that the outbreak of coronavirus and the related economic fallout has placed similar pressures on state and local governments throughout the country.
Fitch also said its analysts believe the city's estimated fund balances, including a
Despite Brown's optimism, some
The control board was created in 2003 by the
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