Moody's Investors Service has downgraded to A3 from A1 the underlying rating on the City of Schenectady's (NY) $34.6 million of outstanding general obligation debt. Concurrently, Moody's has assigned a negative outlook. The bonds are secured by the city's general obligation pledge as limited by the Property Tax Cap-Legislation (Chapter 97 (Part A) of the Laws of the State of New York, 2011).
The downgrade reflects the city's declining financial position, which is expected to deteriorate further in fiscal 2012 as a result of delinquent real estate taxes coupled with rising employee benefit expenditures. The rating also factors in the city's tax base that has been relatively stable until a moderate decline in 2011 and 2012, with potential further declines going forward.. The rating also reflects the city's above average debt burden, along with its below-average socio-economic indicators.