Moody's Investors Service said it has downgraded to Aa2 from Aa1 the rating on the town of Mount Pleasant, N.Y.'s $41 million of outstanding general obligation debt.

The bonds are secured by the town'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 outlook remains negative.

The downgrade to Aa2 reflects the town's weakened financial position caused by reliance on reserves to balance operations.

The rating also factors in the town's sizeable tax base with above average wealth levels and a manageable debt burden with average amortization of principal. The negative outlook reflects the expectation the town's reserves will grow slightly but remain narrow given limited revenue raising ability caused by the statutory 2% property tax cap.

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