Standard & Poor's Ratings Services said it lowered its long-term rating and underlying rating on Folsom, Calif.'s general obligation debt outstanding to AA-minus from AA, as well as its long-term rating on the city's certificates of participation outstanding to A-plus from AA-minus.
The outlook is stable.
"The rating actions are based on our view of the city's five years of deficit spending and declining reserves," said Standard & Poor's credit analyst Bryan Moore.
More specifically, the downgrades reflect the city's: five years of deficit spending, leading to a decline in city reserves to a good level from a very strong level and below the reserve policy; four years of assessed value decreases; and high overall net debt burden per capita.
