Moody's Investors Service assigned a negative outlook last week to the Greater Cleveland Regional Transit Authority's outstanding limited-tax general obligation debt, saying it faces a number of economic and fiscal challenges, including depleted reserves and a steep decline in its main revenue source.

The rating remains at Aa3. The GCRTA has roughly $163 million of outstanding GOs. The negative outlook reflects budgetary and liquidity pressures. The tax base in Cleveland and Cuyahoga County, the authority's main operating areas, has stagnated due to a weak economy.

Moody's analysts said they do not expect improvement in the near term. Foreclosures and declining housing values remain a problem.

The GCRTA relies on a county sales tax for 65% of its revenue, which last year suffered a sharp decline of nearly 11%. Ridership also fell 14% last year, leading to a decline in passenger fares.

On the bright side, the authority is benefiting from recent spending and service cuts as well as a pair of temporary fuel surcharge of $0.25, Moody's said. It also has an affordable debt burden, and all its debt is in a fixed-rate mode.

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