detroitnews | Moody's Investors Service on Tuesday issued two downgrades to the city's tax debt that illustrate Detroit's weakening fiscal condition as it fights to stave off a stake takeover, The Detroit News has learned.The city received a downgrade to B2 from Ba3 for its $553.1 million in outstanding general obligation unlimited tax debt and also a downgrade to B3 from B1 for the $486.4 million in outstanding general obligation limited tax debt. Both ratings fell two points.
Moody's also downgraded the Detroit Retirement Systems Funding Trust from Ba3 to B2, the report states.
It is yet another blow to the financially strapped city, which is fast running out of cash as Gov. Rick Snyder is pressuring Mayor Dave Bing and City Council to agree to a consent agreement that would help implement financial structure and stability.
"We changed it because despite some positive steps that the mayor and City Council have done to reduce the city's general fund deficit, the problems have persisted," said David Jacobson, a spokesman for Moody's. "The fiscal year 2011 general fund deficit balance continues to increase. There's been a persistent inability to achieve structural balance despite all the big spending cuts."
Mayor Dave Bing's chief operating officer, Chris Brown, said in a statement Tuesday afternoon that the downgrade "isn't unexpected." The city is taking steps to mitigate any negative financial impact, he said.
"In December, we narrowly averted a downgrade," Brown said. "Since then, we've been concerned about the continued possibility, and we've worked to avoid it."
