ALAMEDA, Calif. — Moody’s Investors Service downgraded Las Vegas one notch to Aa2 Friday.
The rating action affects $397 million of outstanding general obligation bonds, while $188 million of lease-revenue debt was also downgraded, to Aa3 from Aa2.
According to Moody’s, the drop reflects the continued impact of the recession on the tourism-oriented city. Declining assessments are likely to continue to cause declines in property tax revenue, creating budgetary pressures through at least fiscal 2012, the agency said.
“The housing market downturn has therefore resulted in property tax base declines, and along with decreased visitor volumes to Las Vegas, has had a negative impact on locally generated revenues and area employment,” analysts wrote.
The city’s tourism industry has started to rebound, but visitors continue to spend less than they used to, resulting in tepid tax-revenue growth. However, Las Vegas continues to benefit from healthy financial reserves, generally conservative budgeting practices, and a manageable level of debt, according to Moody’s.
The city has only modest borrowing plans to issue about $15 million in new general obligation debt in early 2011.
