CHICAGO -- Moody's Investors Service slapped Burbank, Illinois with a downgrade and assigned a negative outlook to its A1 rating due to ongoing operating deficits and mounting pension woes.
Moody's lowered the rating to A1 from Aa3 and assigned a negative outlook to the $9.5 million of the city's $11.5 million of outstanding general obligation debt it rates.
"The A1 rating reflects the city's multi-year trend of operating deficits," Moody's said. "The city's available reserves remain adequate, but are declining rapidly."
The A1 rating reflects the city's moderately sized tax base with significant valuation declines, modest debt burden, and still moderate pension liabilities despite a recent history of shortfalls in its annual required contributions to pensions.
"The negative outlook is based on the expectation that reserves will continue to decline given ongoing operating shortfalls and the imperative that the city come into compliance with statutorily required pension contributions or risk the loss of state shared revenues," the rating agency said.
Like other communities across the state, Burbank faces a state imposed move to ARC funding for its public safety pensions, a shift towns across the state have warned they can't afford without accompanying reforms. Pension underfunding and concerns over the higher public safety contribution that loom beginning in Illinois in 2016 have spurred a wave of Moody's downgrades.