Moody's Investors Services said it has downgraded the city of St. George, Utah's general obligation rating to Aa3 from Aa2.

The Aa3 rating primarily reflects the city's large tax base, its position as a regional economic center, and its steady general fund performance, which is bolstered by sound levels of unrestricted liquidity in the capital projects and economic development funds.

The one notch downgrade reflects the persistent risk associated with various city enterprise funds.

These enterprises continue to experience financial challenges due to the combination of a weakened local economy that only recently began to improve, competitive pressures, and delayed rate increases.

Although the city recently enacted various rate increases and cost controls in order to balance enterprise fund operations, the continued weakness in the funds' balance sheets and debt service coverage levels remain a key pressure on the rating.

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