Moody's Investors Service downgraded the general obligation bond rating of East Pennsboro Township two notches to Baa2 from A3, affecting $31.8 million of debt.
The bonds are secured by the township's general obligation unlimited tax pledge.
Moody's, which also assigned a negative outlook, cited narrow cash reserves and several consecutive years of negative general fund balances, "both of which are expected to persist into the medium term." It also said the township's sizeable base, slightly above average socioeconomic indicators, and manageable debt burden factored into the rating.
The negative outlook, according to Moody's, "reflects the township's weak overall financial position, as well as uncertainty surrounding the township's ability and willingness to adequately reduce expenditures and/or raise revenue in order to regain structural balance in the near to medium term."
East Pennsboro is in Cumberland County, across the Susquehanna River from capital city Harrisburg.