Moody's Investors Service said it has downgraded to B2 from B1 the ratings on the village of Riverdale, Ill.'s general obligation unlimited tax rating.
Concurrently, the outlook has been revised to negative.
The rating action affects $1.6 million of outstanding Moody's-rated debt.
The downgrade reflects the village's deteriorating financial position as reported for fiscal 2012, resulting in an increased deficit position for the general fund than what was previously projected.
Additionally, the B2 rating reflects ongoing operating deficits in the general fund stemming from a history of poor budgetary oversight and reliance on transfers from the village's enterprise funds poorly funded pension liabilities, and a challenged local economy.
The downgrade also reflects the lack of specific parameters and a concrete timeframe with regard to the village's deficit elimination plan.
The assignment of the negative outlook reflects the belief that significant challenges stand in the way of the village reestablishing structurally balanced financial operations, including elimination of the growing general fund deficit balance.
The village's narrow cash position also increases the risks that the village will continue to make payments to employees, vendors and creditors on time and in full.