Fitch Ratings downgraded $98 million of general obligation bonds issued for the Indianapolis-Marion County Public Library to AA from AAA.

The rating action follows an Indiana  law capping property tax bills, which analysts said would likely put pressure on the library’s fiscal position in the future.

The library also has depleted its general fund reserves over the last few years to cope with delays in property tax assessments that have forced it — like other ­Indiana issuers — to borrow over the short term to cover cash-flow needs. At the same time, the library could face rising costs related to a new central library that opened in 2008, according to Fitch.

“Library management demonstrated its willingness to contain costs to offset declining property tax revenues, identifying about $3 million in budget savings in 2010,” analysts said in a recent release. “Nonetheless, Fitch expects further, potentially more severe cuts could become necessary.”

The library serves nearly all of Marion County, with the exception of two small towns. Its direct debt burden is low and future capital plans are minimal, Fitch said.

Moody’s Investors Service rates the library’s credit Aa2.

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