Fitch Ratings last week downgraded to B from BB-minus $7.8 million of water and sewer debt issued by Pontiac, saying the city’s habit of dipping into the utility funds to subsidize its own general fund has constrained financial flexibility and could lead to future pressures.

Fitch retained its negative outlook at the lower rating. The action comes as the city struggles to resolve some of its fiscal pressures in order to avoid emergency takeover by the state.

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