Newark, N.J., was put on review for a downgrade by Moody's Investors Service.
Moody's action on March 17 affects its A3 general obligation unlimited tax bond rating and Baa1 GO limited tax rating of the city. A total of $540 million is affected.
"The city will be late in introducing its fiscal 2014 budget, continues to operate with a structural deficit, and is likely to increase the size of its tax anticipation note borrowing this year," Moody's analyst Josellyn Yousef and senior analyst Julie Beglin wrote.
The analysts also said they were concerned by the announcement on March 12 from New Jersey that it might put the city under formal oversight because the city could need financial aid for its structural gap. Formal supervision would allow the state to have greater control over the city's budget and hiring practices.
The analysts expect financial information from Newark in the next 30 to 60 days that will allow them to assess the city's financial condition.
Newark had about 278,000 residents in 2012 and is New Jersey's largest city.
Newark government did not immediately respond to a request for a comment.