Moody's: Negative outlook for Philadelphia
If Philadelphia continues to spend more than it is collecting in revenues, it could be at risk for a credit downgrade, according to a new credit report by Moody’s Investor Services.
The credit agency affirmed Philadelphia’s current A2 rating (a high-medium grade) on its $1.5 billion in outstanding debt. Yet, Moody’s revised Philadelphia’s outlook from “stable” to “negative.”
“The negative outlook reflects the city's inability to achieve structural balance resulting in a continued weakening of reserve levels,” the report states. “While the city conservatively budgets and revenues have been on an upward trend, expenditures continue to outpace revenue growth. As a result, additional reserve declines are projected through fiscal 2018, ending with a General Fund balance of just over 1% of revenues, well below that of like-rated peers.”
The city’s reserve levels, also called fund balance, refers to the money leftover at the end of the year.
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