MEMO: S&P downgrades Cincinnati's bond rating outlook - Cincinnati News, FOX19-WXIX TV

S&P downgrades Cincy's bond rating outlook

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CINCINNATI, OH (FOX19) -

Standard and Poor's has downgraded the city's bond rating outlook, according to a memo sent out by the Cincinnati city manager.

The city requested the bond rating in anticipation of the sale of over $50 million in bonds that will be issued next week. The bonds include $33 million being issued for the streetcar project.

The S&P report points to a "structural gap" resulting from revenue losses that could necessitate reserve funds to balance the City's budget as the source of the revised outlook.

S&P's official bond rating was AA+, the second highest rating assigned by the agency. 

Moody's outlook remained stable, noting the city's credit quality "has not considerably weakened during the economic downturn". The agency warns the city's failure to meet the required pension contributions could result in a downgrading of the outlook.

The rating agency's Aa1 rating held, citing the city's "pressured, but still satisfactory financial position". Strengths identified by Moody's include "longstanding prudent financial policies", income tax revenue growth, and redevelopment in the city. Challenges pinpointed include a "reliance on economically sensitive income tax revenues" for the General Fund, significant budget gaps leading to cuts, and pension contribution concerns.

In the memo, the city administration reaffirmed its position that the foundation of Cincinnati's financial issues stems from revenue losses.

The city administration says its goal is to earn back a stable outlook designation from S&P by showing the fiscal stewardship necessary for that distinction.

The city manager points to economic development as a means to increase the revenue sources needed to stabilize the city's "structural imbalance".

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