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City of Toledo's bond rating downgraded

The bond rating agency Standard & Poor's Wednesday downgraded Toledo's financial outlook from stable to negative.

Toledo Councilman George Sarantou, chairman of council's finance committee, said the evaluation by Standard & Poor's underscores the city's troubled financial situation but that it would not mean a significantly higher cost in interest payments.

The four-page Standard & Poor's report blames its more pessimistic outlook on the city's falling tax revenue.

"They essentially looked at our income tax receipts and based it on the non improvement of the tax receipts," Mr. Sarantou said.

In May, Moody's Investors Service downgraded Toledo's rating on its general obligation debt by one notch, from A3 to Baa1, and the city's financial outlook from stable to negative.

Mayor Carty Finkbeiner yesterday said the negative Standard & Poor's outlook corroborates the city's revenue is affected by the nation's weakened economy.

In February, two University of Toledo professors forecast tax revenue for 2009 at between $140.7 million and $147.8 million — well below the $169.7 million the Finkbeiner administration was counting on for the year.

The city collected $9.67 million less in income taxes through Aug. 31 than during the first eight months of 2008.

The current year-to-date decline of 10.48 percent was better than the 12.65 percent shortfall reported in September. The city collected $82.69 million by Aug. 31 from Toledo's 2.25 percent payroll tax, which is 57 percent of the city's predicted year-end total of $145 million.

The city's general fund deficit stands at about $7.8 million with just three months remaining in 2009.

Mayor Finkbeiner said the city — pending council's approval — will get $3.2 million from FirstEnergy Solutions through the Northwest Ohio Aggregation Coalition to help pay down the city's 2009 deficit.

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