Standard & Poor's Ratings Services said it revised its outlook to negative from stable on debt issued for Fairfield, Calif.
In addition, Standard & Poor's affirmed its A long-term rating on the city's pension obligation bonds (POBs). The negative outlook is based on the city's large historical and projected structural deficit absent the approval of a local sales tax measure.
"The negative outlook reflects our assessment of the city's structurally unbalanced budget, with projected deficits in the next two fiscal years, which could deplete general fund reserves should the voters decide not to raise local sales taxes in the November election and without further budget adjustments," said Standard & Poor's credit analyst Jaime Trejo. "The outlook also reflects the uncertainty around projected new property tax money from the dissolution of the redevelopment agency," added Trejo.
The bonds are secured by the city's obligation to make appropriations and its absolute and unconditional obligation to make debt payments on the bonds from any legally available funds.
Fairfield, with an estimated population of 104,172, is midway between San Francisco and Sacramento at the intersection of Interstates 80 and 680 and is the county seat for Solano County.