April 9 (Bloomberg) -- Las Vegas’s credit outlook was lowered to negative from stable on $561.2 million of debt by Fitch Ratings, which cited budget deficits and the lingering housing crisis.
The company assigned AA ratings, its third-highest, to $19.9 million of limited tax general-obligation bonds expected to be priced April 17 in a negotiated sale. It also affirmed its AA rating on $353 million of outstanding limited tax general-obligation bonds and AA- rating on $188.3 million of 2009 certificates of participation.
“The city has been facing lower revenues for some years now and they’ve been able to manage lower revenues with some cuts to expenditures and some one-time strategies, but they are still in a situation where over the long term their expenditures are outweighing the revenue available to them,” said Stephen Walsh, a director in Fitch’s public finance group, said in a telephone interview.
Last week, the council for America’s fastest-growing large city from 2000 to 2010, unanimously approved a tentative budget for fiscal 2013 in which revenue is expected to come in $10.4 million short of expenditures, according to the Las Vegas Sun. The budget projects revenue down 0.4 percent from last year, mainly due to a decline in property-tax revenue.
Improvements in tourism and gambling business haven’t yet begun to help the housing market in the city, where home values are declining for the sixth consecutive year to approach 1997 values, Fitch said. The company also pointed to increasing costs for police services as a “key fiscal challenge.”
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