THE BOND BUYER
Wednesday, August 19, 2015 | as of 4:43
Regional News PMET
Moody's Downgrades St. Louis
by
AUG 17, 2015 4:40pm ET
CHICAGO - Moody's Investors Service downgraded St. Louis one notch citing the city's weak
socioeconomic profile, reliance on an earnings tax, high debt burden and relatively narrow
financial position
The action on Aug. 14 lowered the city's general obligation rating to Al from Aa3, its lease-
revenue debt for essential services to A2 from A1, and its non-essential rating lease rating to A3
from A2. The lease-backed debt is subject to annual appropriation risk
The city has $27.4 million of GOs and $123.5 million of essential purpose lease backed debt
issued through the St, Louis Municipal Finance Corp. and $138.6 million of outstanding lease
revenue debt issued for non-essential purposes through the corporation. The outlook on all
ratings is stable.
The city's credit challenges "are balanced against several attributes, including a tax base that
remains sizeable despite recent declines; relatively stable financial performance, recent declines
in pension costs due to reforms; and a diverse economy that continues to serve as a regional hub
for healthcare, higher education, and finance," Moody's said.
The city's stable outlook stems from recent moves by the city to cut expenses which ensure
structurally balanced financial operations, an anticipated modest fiscal 2015 year-end surplus,
and the expectations of balanced operations in fiscal 2016.
City Comptroller Darlene Green sought to highlight that the Moody's action stemmed in part
from revised rating methodology.
"The city continues to manage these financial challenges in a fiscally responsible and prudent
manner with strong financial management practices such as conservative budgeting," Green said
ina statement. "The city has taken steps to increase revenues and decrease expenditures in order
to strengthen its profile and increase reserves." The city anticipates a $2.3 million surplus this,
year.
The city's earnings tax must be renewed by voters next year.
Green expressed confidence that the earnings tax would be approved next year as it passed in
2011 by a margin of nearly 9 to 1