Standard & Poor's Ratings Services said it lowered its long-term rating and underlying rating on Elmira, N.Y.'s general obligation debt one notch to A-minus from A.
The outlook is negative.
The downgrade reflects Standard & Poor's opinion of the city's deteriorated liquidity, which the rating service believes leaves the city vulnerable to expenditure pressure. The negative outlook reflects Standard & Poor's opinion of the challenges the city will face as it attempts to stabilize insurance costs related to its self-insurance plan and the projection of future reserve decreases over the next two fiscal years.
The rating service also assigned its A-minus long-term rating and negative outlook to Elmira's $3.436 million series 2015 GO bonds.
"We believe we could lower the rating further, one or more notches, if reserves were to decrease significantly and if liquidity were to deteriorate further," said Standard & Poor's credit analyst Stephen Doyle. "If the district were to switch insurance programs effectively or offset increased costs over the next few years, however, we could revise the outlook to stable."
The city's faith-and-credit pledge secures the bonds. Officials plan to use series 2015 GO bond proceeds to finance bond anticipation notes permanently and fund various citywide capital improvement projects.
