Selma debt credit rating downgraded by financial services company
SELMA, AL (WSFA) - The City of Selma’s debt credit rating has been downgraded, meaning the city faces major uncertainties in regard to adverse business, financial and economic conditions.
S&P Global Ratings lowered its rating in Selma’s “general obligation bonds and warrants” from BBB+ to BB+. According to the company, the downgrade reflects the city’s continued structural imbalance, without an agreement among city officials to reach a balanced budget.
The rating reflects what S&P Global Ratings view as Selma’s:
- Very weak management
- Weak liquidity
- Very weak budgetary performance
- Weak budgetary flexibility
- Very weak economy
- Adequate debt and contingent liability position
- Strong institutional framework score
Back in October, Selma failed to meet its payroll obligations for city workers, which Mayor Darrio Melton said was a budgetary shortfall. A total of 277 employees were not paid on time. Melton also announced on Oct. 15 that the city would lay off 68 employees, a decision he said was made after a discovery that the budget passed by the city council on Sept. 26 did not account for the city’s outstanding debt of $1.2 million.
Though S&P Global Ratings expects Selma’s cash flow to improve as the city collects revenue from taxes and business licenses, they also expect the city to remain pressured in the near term. The company could lower the city’s credit rating further if fiscal 2018 results indicate significant deterioration in Selma’s finances.
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