New Britain, Conn., Mayor Erin Stewart said her city is on the right track despite its general obligation downgrade by Moody's Investors Service to Baa2 from Baa1.
Moody's cited New Britain's reliance on nonrecurring revenues to stabilize its financial position in recent years. The rating agency also revised its outlook on the 73,000-population city to negative from stable.
"[It] further reflects the city's significant sized tax base and challenged demographic profile. The rating also incorporates the city's elevated debt profile with rapidly escalating debt service and its modest pension liability," the rating agency said Tuesday.
S&P earlier this year affirmed its A-plus rating for New Britain after upgrading the city four notches through two upgrades in 2016, citing strong financial management. The city had turned a $30 million deficit into o a nearly $15 million surplus for fiscal 2015.
Moody's has not had the city in for a full rating since 2014, according to a City Hall spokesman.
"I recognize the need for a more expanded tax base, which is why $58 million developments like the one we recently broke ground on at the site of the old police station is on the fast track to be completed," said Stewart, elected in 2013.
"We are on the right, albeit difficult path to a bright future. It takes time."
Moody's said the negative outlook reflects the short-term challenge New Britain will face to match recurring revenues with recurring expenditures while managing its debt service pegged to spike through fiscal 2021.
New Britain, said Moody's, could earn an upgrade through a sustained trend of structurally balanced operations without one-shots, a material reduction in debt burden, growth in its tax base or an improved resident wealth and income profile.
By contrast, continuing reliance on nonrecurring revenues, erosion of its financial position, taking on more debt or deterioration of New Britain's tax base or wealth profile could lead to a downgrade.
