CHICAGO - Ferguson, Mo. fired back at Moody's Investors Service downgrading the city to junk, accusing the rating agency of being unwilling to give it more time to provide information that would offer a fuller picture.
The rating agency dropped the city's general obligation debt seven notches to Ba1, one level into speculative grade territory, from Aa3. The rating agency attributed the steep fall to the city's deteriorating balance sheet and worries over further strains posed by lawsuits and a looming federal consent decree.
Ferguson came under the national spotlight after the controversial killing of Michael Brown, an unarmed African American, by a white police officer last year. The shooting sparked widespread protests and riots and prompted a federal probe of police tactics and the city's reliance on court fines.
The once plentiful reserves of the city northwest of St. Louis are dwindling and the city could be headed toward insolvency as soon as 2017, Moody's said, citing city documents. The downgrade "reflects severe and rapid deterioration of the city's financial position, possible depletion of fund balances in the near term, and limited options for restoring fiscal stability," Moody's wrote.
In a response sent Sept. 21, Ferguson said in a statement that it was unable to provide Moody's with all the information requested due to limited time constraints imposed on it by the rating agency and its refusal to extend a deadline to comply.
"As a result, the city believes that Moody's report is incomplete and fails to provide true transparency associated with Ferguson's finances," the statement read. It reports that the city is still in the process of counting fiscal 2015 revenues and preparing plans to address revenues and expenses and faces staffing constraints due to ongoing negotiations with federal Justice Department officials.
"In the rating report, Moody's alluded to an unwillingness by the city to provide the information that was requested. Again, due to the limited timeframe for responding, the city was not able to provide all of the information requested including matters relating to pending litigation and DOJ negotiations," the statement said. "Officials are working on a comprehensive plan to address concerns relating to its current and future budgetary constraints."
The action impacted $6.7 million of outstanding GO bonds, $8.4 million of certificates of participation from a 2013 issue, and $1.5 million of 2012 certificates. The COPs are payable from available revenue and subject to appropriation. The credits remain under review for further downgrade or withdrawal due to a lack of information.