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S&P affirms Salinas ratings but revises outlook to negative, cites sewer fund oversight and projected operating draws
Summary
S&P affirmed the city's insured credit rating and lease revenue bond rating but changed the outlook to negative, pointing to weaker internal controls and exposure in enterprise funds — particularly the sanitary sewer fund — and to projected operating drawdowns if revenue measures lapse.
Finance Director Selena Andrews told the Finance Committee on Aug. 12 that S&P Global Ratings conducted a periodic review of the city’s outstanding leases and lease-revenue bonds, affirmed the city’s insured credit rating (ICR) at AA- and the outstanding lease revenue bonds at A+, and revised the outlook to negative.
Andrews said S&P’s negative outlook reflects concerns about internal controls and volatility in enterprise funds, particularly the sanitary sewer fund, coupled with a multi-year forecast that shows potential operating drawdowns. “S&P could…
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