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MOODY'S LOWERS RATING ON UTICA, N.Y. FROM 'Baa' TO 'Ba'; CITIES FISCAL DISTRESS & LACK OF DEFINITIVE LONG-TERM PLAN TO RESTORE BALANCE

MOODY'S LOWERS RATING ON UTICA, N.Y. FROM 'Baa' TO 'Ba'; CITIES FISCAL
 DISTRESS & LACK OF DEFINITIVE LONG-TERM PLAN TO RESTORE BALANCE
 NEW YORK, Aug. 11 /PRNewswire/ -- Effective today Moody's Investors Service lowers the rating on the City of Utica, N.Y. from "Baa" to "Ba." This rating action follows Moody's review of Utica's preliminary fiscal 1992 year end results, the fiscal 1993 budget and deficit funding proposals.
 In revising the rating Moody's noted that the City of Utica has experienced a precipitous deterioration in financial position over the last two years largely as a result of poorer than anticipated state aid and property tax revenue performance. Further, unrealistic budgeting practices including the absence of provisions for pension and social security costs in the current year budget are expected to increase the city's accumulated deficit position. Recently, the city received state authorization to issue up to $9.8 million in deficit funding bonds. The issuance represents the second time in less than ten years that the city has resorted to the use of long term debt to fund operations. To assist in funding the deficit bonds the city will also receive half of the one cent increase in the country sales taxes collected within the city boundaries. However, the sales tax expires in August 1994, and the projected revenues do not appear adequate to fund the debt within the tax's two year statutory life. The financing of operations with debt, while addressing the accumulated deficit position, does not cure the structural imbalance which has been an inherent characteristic in the city's finances in recent years. In addition, management's inability to work cooperatively to develop a viable long-term financial plan exacerbates the city's problematic financial position and outlook. These factors result in a significant weakening in the city's long-term credit position. Consequently, the rating is revised from "Baa" to "Ba." The ability of the city's administration to return to and maintain structurally balanced operations over the long-term is a critical challenge now facing the city and an essential element of this rating.
 -0- 8/11/92
 /CONTACT: Marci Herzlinger Tavashi, 212-553-7166, or Michael Johnston, 212-553-7810, both of Moody's/ CO: ST: New York IN: SU: RTG


SM-OS -- NY088 -- 9108 08/11/92 16:20 EDT
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Publication:PR Newswire
Date:Aug 11, 1992
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