Moody's Investors Service said it has downgraded to A3 from A2 the rating on Arlington's, Wash.'s $16.7 million of outstanding limited tax general obligation debt.
The outlook is negative.
The downgrade reflects continued narrow governmental finances that deteriorated substantially in fiscal 2011. Despite unaudited financial statements that show an improvement in unrestricted general fund cash for fiscal 2012, the city's financial flexibility remains limited.
The rating also reflects the deteriorating trend in the city's tax base which has lost nearly a quarter of its assessed value in the past five years, its average resident wealth indicators, and manageable debt burden.
The outlook reflects the likelihood of further rating action if the city fails to continue to rebuild the general fund balance as it did in 2012.
