Standard & Poor's Ratings Services lowered its issuer credit rating (ICR) to 'BBB' from 'A' on Fresno, Calif. and its long-term rating and underlying rating (SPUR) to 'BBB-' from 'A-' on the city's lease revenue bonds. The outlook is negative.

"The lowered ratings reflect our view of persistent general fund imbalances despite recent workforce reductions and modest revenue improvement starting in fiscal 2011," said Standard & Poor's credit analyst Misty Newland. "The city's budget flexibility has become increasingly narrow given the level of previously enacted workforce reductions, closed public safety contracts, low general fund balances, and weak general fund liquidity, in our view," continued Ms. Newland.

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