Citing weak sales tax revenues and continuing deficits for parking and convention assets, Fitch Ratings has downgraded some City of Tacoma bonds.
The ratings service said Wednesday that while overall city revenues appear stable, continuing weakness in sales tax receipts and uncertain revenues for the city’s parking garages, parking lots and convention facilities merit downgrades .
“The negative outlook for the general obligation bonds reflects operational pressures from certain volatile revenue sources, enterprise funds that may need material general fund contributions and escalating debt service resulting from this debt restructuring,” the ratings service said.
“Fitch believes the general fund may be vulnerable to deficit operations in the convention center and parking funds. These enterprises are running sizable deficits that are expected to deplete most of their reserves by fiscal year end 2012. Given escalating debt service requirements of the enterprises and budgeted expectations of minimal financial cushions by fiscal year end 2012, the general fund may have to support their operations at increased levels beginning in fiscal 2013. In the proposed fiscal 2011-2012 biennium budget, the general fund is contributing just $1.2 million to the parking enterprise, with no subsidy to the convention center enterprise. Although this risk is material, Fitch notes that improved economic conditions and further city actions could reduce or eliminate this vulnerability.”
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