Fitch Ratings said it downgrades to AA from AA-plus Taylorsville, Utah's $7.83 million sales tax revenue bonds, series 2006; and its implied general obligation bond rating.
The rating outlook is revised to negative from stable.
The bonds are secured by an irrevocable first lien on the city's 1% sales and use tax revenues levied on the purchase price of nearly all goods sold within city limits.
The downgrade reflects the projected fiscal 2013 general fund deficit and Fitch's expectation of reduced financial flexibility due to declining reserves.
The negative outlook incorporates the possibility of a further drop in reserves, if membership of the local fire district and the associated savings are assumed in the fiscal 2014 budget, but are not realized again due to citizen opposition.
