Moody's Investors Service said it has downgraded the city of North Las Vegas, Nev.'s general obligation limited tax bond rating to Ba1 from Baa2 and revised the rating outlook to stable.

The bonds are secured by the city's full faith and credit pledge, subject to Nevada's statutory and constitutional limitations on overlapping levy rates for ad valorem taxes.

The downgrade to Ba1 reflects the city's persistent and substantial operating challenges. Its weak financial position and strenuous tensions with labor groups resulted in declaration of a state of emergency for fiscal 2014, marking the second such declaration in two years.

The city also remains reliant on outsized transfers from its water and sewer enterprises to support its general fund and correct substantial budgetary imbalances. Slow and uneven recovery in both the metro area's tourism dependent economy and still weak property values continue to weigh on the city's tax revenues, which remain well below pre-recession levels.

Lastly, the city's direct debt burden remains elevated but the bulk of GOLT debt service is supported directly by pledged resources from the water and sewer enterprises.

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