Moody's Investors Service has affirmed the city of Allentown’s A3 General Obligation debt rating, but revised its outlook to negative from stable.
Allentown has roughly $80 million of rated General Obligation-backed debt outstanding at this time.
According to Moody’s, “The A3 rating speaks to the fact that the city has opted, for the past several years, to rely on a cash inflow from its utility sale in 2013 to sustain operations rather than correcting a long-standing, considerable, structural operating imbalance. The A3 rating also highlights that while the structural imbalance persists, the city's current reserves, though narrowing, are still in line with similarly-rated cities in the commonwealth.”
Mayor Ray O’Connell said, “Moody's has affirmed our A3 rating, and we share the concerns raised in the outlook. The 2019 city budget now under development will be proactive in addressing these concerns and will establish a solid fiscal foundation for subsequent years.”
Some $7.5 million was taken from reserves to balance the 2017 and 2018 city budgets. Reserves have also been used to remedy a malware attack on the city’s computer systems and pay legal fees to defend lawsuits filed against the city.