CHICAGO — Moody’s Investors Service Friday revised its outlook to negative from stable on Cincinnati’s general obligation debt as the city faces declining income tax revenue, which makes up nearly two-thirds of its general fund.

The agency affirmed its Aa1 rating on the city’s outstanding unlimited-tax GO debt, which totals $443 million. It also affirmed its Aa2 rating on the non-tax revenue debt, which totals $84 million, and revised its outlook to negative from stable on that debt as well.

All of Cincinnati’s debt is in a fixed-rate mode and does not include any derivative agreements.

Analysts praised the city’s strong and diverse economy, conservative debt and fiscal policies, and historically healthy financial position. But a weak economy has challenged income tax collections last year and could mean more challenges ahead.

“Moody’s believes that while it is notable that the city continues to adhere to its financial policies, the negative pressures caused by general economic conditions could increase over time and lead to further deterioration of credit quality,” analyst Henrietta Chang said in a release on the rating action.

“Favorably, the city has a variety of sources with which it could enhance revenues and make progress toward structural balance,” she wrote. “The willingness of city officials to access available revenues needed to support healthy financial operations will factor into future credit reviews.”

Cincinnati plans to borrow roughly $50 million in new-money debt in the next few months to finance its five-year capital improvement plan.

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