Oct. 20 (Bloomberg) -- Fresno, California’s fifth-most- populous city, had $477 million of debt downgraded three levels, to A2 from Aa2, by Moody’s Investors Service. The outlook was revised to negative from stable.
The city’s general-fund budget gap this fiscal year limits its “ability to absorb additional budgetary pressure,” according to a Moody’s statement explaining the so-called superdowngrade. The municipality has a “weak economic base, with unfavorable demographic and economic trends,” the report said.
Fresno has a population of about 495,000, according to the U.S. Census Bureau, trailing Los Angeles, San Diego, San Jose and San Francisco. Almost 21 percent of the residents of Fresno County, which includes the city, live below the poverty level, Census data show.
“Like all California cities, Fresno’s ability to raise revenues is highly constrained; its primary budget balancing option is cost reduction,” Moody’s said in the report.
Cities, counties and towns, whose tax income plummeted during the worst recession since World War II, make up 24 percent of all multiple-level downgrades in 2011 compared with 9 percent last year, according to Municipal Market Advisors, a research firm that started tallying the ratings changes last year.
--Editors: Stephen Merelman, Stacie Servetah
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