Moody's Investors Service said it has downgraded the city of Taylor, Mich.'s general obligation limited-tax rating to Ba1 from Baa3, affecting $33.1 million of Moody's-rated debt.
The outlook remains negative.
The downgrade to the Ba1 rating reflects the city's deficit unassigned fund balance at the close of fiscal 2011, which worsened in fiscal 2012; the need for the city to begin supporting component unit debt out of the general fund in fiscal 2013; and a tax base experiencing significant declines.
The rating additionally incorporates the expectation that the district will remain in a deficit financial position at least until fiscal 2016.
The negative outlook is based on the possibility that the city's financial operations will deteriorate further if the city is unable to meet the targets of its deficit elimination plan. The general obligation limited tax pledge of the city represents a first budget obligation, though no dedicated levy is available to pay debt service.