Moody’s Investors Service downgraded Poughkeepsie, N.Y.’s debt to Baa2 from A2.
Tuesday’s three-notch downgrade of the city’s general obligation debt affected $53.4 million. Moody’s retained a negative outlook on the bonds.
The debt is secured by the city’s unlimited ad valorem property tax pledge.
Moody’s downgrade was due to the city’s residents’ below-average wealth levels, the city government’s high debt burden, and poor financial position, Moody’s lead analyst Valentina Clark said.
Poughkeepsie’s per capita-income was $23,192, or 85% of the United States average.
The city debt burden is “above average” at 2.5% of full valuation, Clark wrote. When overlapping obligations are considered, the debt burden rises to 3.3%.
The city is running its sixth annual deficit in 2012, projecting use of $300,000 from its fund balance. The fiscal 2011 operating deficit cut the general fund balance to a “deeply negative” $9.5 million, minus-22.9% of general fund revenues.
Poughkeepsie benefits from a moderately sized tax base of $2 billion. Clark expects it to decline in the near term but increase in the medium term.