Restoring Topeka’s Aa2 general obligation bond rating will require building up the city’s general fund balance over the next five years, City Manager Jim Colson said after Moody’s Investors Service lowered $164 million of Topeka GO debt to Aa3 from Aa2.
“While we are disappointed in the outcome, we hear the message loud and clear,” Colson said. “We need to balance our budget and rebuild our liquidity.”
The target is a general fund balance of at least 15% of annual revenues, Colson said.
Analysts said the downgrade was due to a “trend of operating deficits that have resulted in narrowed reserve levels with continued pressure over the near term.”
The city is determined to building up its reserves, Colson said.
“We will be working actively with the city council during annual budget planning and throughout each year to focus on restoring general fund balances,” he said.
Topeka’s GO bond debt was raised to Aa2 from Aa3 in 2010. Moody’s is the only agency that rates Topeka’s municipal debt.