Moody’s Investors Service downgraded Josephine County, Ore.’s full faith and credit limited-tax rating to A2 from A1 in conjunction with the sale of its limited-tax pension obligation revenue refunding bonds, Series 2012, federally taxable, expected to be issued in the amount of $8.2 million.

Moody’s also dropped the county’s issuer rating to A1 from Aa3. The county’s ratings have a negative outlook.

The downgrades reflect diminished operational and financial flexibility following an unsuccessful May 15, 2012, ballot measure which would have replaced $12 million in sunsetting federal assistance for county public safety services.

The county proactively budgeted for possible ballot measure failure by amassing solid reserves and planning unprecedented public safety personnel and service reductions. However, risk remains as planned operational efficiencies have yet to be realized.

The ratings further incorporate the county’s large tax base, average socioeconomic indicators relative to its peer rating group, modestly sized debt burden featuring rapid payout and somewhat limited economy.

The negative outlook reflects the expectation that, absent an alternate funding source, county operations will remained strained, as well as risk that the county’s cost savings measures may not produce expected efficiencies.

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