Moody’s Investors Service last week dropped Taylor’s general obligation limited-tax rating three notches to Baa3 from A3.

Analysts warned that the Detroit suburb faces an extremely narrow financial position and a debt burden that will require general fund support, starting in 2013. The outlook stayed negative.

The downgrade affects $45 million of rated GOLT bonds. Taylor has $109 million of outstanding GOLT debt.

“The negative outlook reflects our expectation that the city’s financial operations will remain pressured due to financial challenges in the near to medium term,” analysts said. “The general obligation limited-tax pledge of the city represents a first budget obligation, though no dedicated levy is available to pay debt service.”

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