City of Montgomery's credit rating downgraded - WAFF-TV: News, Weather and Sports for Huntsville, AL

City of Montgomery's credit rating downgraded

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MONTGOMERY, AL (WSFA) -

The City of Montgomery's credit rating has taken a hit after Moody's downgraded it from the third highest rate - to an A-1, the fifth highest. While it's a medium rating, the city is still considered a low credit risk.

It's the post-recession outlook for many cities rebuilding with unpredictable revenue streams.   For Montgomery, Moody's saw the city's financial imbalance as a cause for concern.

Among the challenges listed by Moody's was the reluctance to make reductions. Finance director Barry Crabb says in the past, the city chose not to cut services and use a reserve.

The city's reserve has improved from $5 million to $15 million. While Montgomery officials have no plans to go to the bond market, the credit downgrade will cause higher interest rates.

Montgomery's highest revenues are reported during the first quarter. A credit line is used to supplement during the slower months and paid off in the following fiscal year.

Moody's viewed this as yet another negative.

All Montgomery's issues boil down to a cash flow issue, a challenge in a military community in the middle of a government shutdown.

The economic instability is affecting more than Montgomery's bottom line.

Copyright 2013 WSFA 12 News.  All rights reserved.

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