Fitch Ratings Tuesday affirmed its AA rating and negative outlook on Las Vegas's limited tax general obligation bonds impacting $348 million in outstanding debt.
The ratings agency also affirmed its AA-minus rating on $188.3 million in certificates of participation.
The negative outlook was attributed to continued structural deficits in the city's general fund and limited options for reversing the trend absent revenue growth.
Management currently projects deficit operations through fiscal 2017 that would reduce unrestricted fund balance to less than 10% of general fund spending.
Recent results have been stronger than projections have indicated, however; and Fitch analysts said they expect the city to continue to avoid the large drawdowns on reserves forecast in the city's multi-year projections.
Expenditures for police services pose a key fiscal challenge for the city and are a major factor in projected ongoing deficits.
A quarter-cent sales tax proposed in the state legislature could ease funding pressures, but faces uncertain prospects in the legislature, according to the report.
"If this measure is not adopted, new cuts to police services would likely be required to balance the city's budget, but could prove politically challenging," the Fitch report said.
Las Vegas has experienced two years of steady improvement in most tourism-based indicators. Home prices also began to show signs of a turnaround in 2013 but remain well below pre-recession levels, according to analysts.