Moody’s Investors Service said Monday that flooding in Mississippi could negatively affect municipalities dependent on gambling, a sector where revenues are already down because of the recession.
After weeks of steadily rising floodwaters, the Mississippi River crested in Vicksburg on May 18 at 57.06 feet, above the historic record of 56.2 feet recorded in May 1927.
“As the overflowing waters slowly recede from record-setting levels, municipalities like Vicksburg and Natchez in Mississippi are feeling economic pain, as they grapple with declines in gaming revenue and expensive post-flood capital repairs,” analyst Michelle Smithen said in Moody’s Weekly Credit Outlook.
Vicksburg is rated A1 and under review for a downgrade by Moody’s. Natchez is rated A1.
While federal and state emergency funds are expected to help cover costs, reimbursement delays will challenge entities with narrow financial flexibility, Smithen said.
Vicksburg has the highest concentration of gambling revenues with 22% of its general fund revenue generated from gaming activities at four casinos located along the riverfront. Two of four casinos are closed due to flooding that will persist for several weeks and delay repairs.
Natchez’s one riverboat casino, which accounts for 9% of the general fund, closed earlier in May and will not reopen until the river recedes in several weeks.
“This, together with narrow general-fund cash reserves, will challenge city finances as Natchez assesses infrastructure damage and waits for FEMA and state emergency fund distributions,” Smithen said.
In Ba1-rated Adams County, where Natchez is the county seat, 3% of total general fund revenues are derived from gambling. In Aa2-rated Warren County, where Vicksburg is the county seat, gambling revenues are set aside for one-time capital purposes and do not impact the general fund.