NEW YORK - Moody's Investors Service said it has downgraded to A2 from A1 the underlying rating on the town of Clarkson, N.Y.'s $290,000 of outstanding rated general obligation bonds and assigned a negative outlook.

The bonds are secured by a general obligation pledge as limited by the Property Tax Cap -- Legislation (Chapter 97 (Part A) of the Law of the State of New York, 2011.

The A2 rating reflects the town's limited tax base, minimal debt burden, and declining financial position.

Effective January 1, 2012, all local governments in New York State are subject to a property tax cap which limits levy increases to 2% or the rate of inflation, whichever is lower. While school district debt has been exempted from the cap, debt has not been exempted for all other local governments.

Moody's will continue to treat school district general obligation debt issued in New York as an unlimited tax pledge and continue to research the impact of the property tax cap on debt issued by nonschool districts.

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