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City loses top bond rating from Standard & Poor's

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Indianapolis had its bond rating cut from AAA to AA this week by financial rating service Standard & Poor's after the city dipped into reserve funds to balance its budget.

The ratings agency said it lowered the rating because of criteria changes, not because of any change in the city's financial condition. AAA is the top rating a city can achieve.

S&P said the city’s outlook is stable, reflecting the city's “very strong budget flexibility and liquidity, along with its strong management."

Two other major ratings services, Fitch and Moody’s Investor Service, retained their AAA ratings for the city.

“This was not an unexpected move given that Standard and Poor’s new ratings model resulted in adjusted ratings for cities such as Omaha, St. Louis and Des Moines, Iowa, and likely other cities in the near future,” Indianapolis Mayor Greg Ballard said in a prepared statement. “Since Indy retains its AAA ratings from the other two major rating agencies, we don’t anticipate this one decision to materially increase the city’s borrowing costs.”

Ballard, a Republican, said he tried to avoid tapping reserve funds to balance the budget, but his plan to eliminate a property-tax homestead credit to raise money was shot down by majority Democrats on the City-County Council.

Instead, the city took $15 million from reserve funds, including a $6.9 million loan from a fiscal stability fund, $5.7 million from a water-and-sewer escrow fund, and $2.4 million from a rainy-day fund.

“Each of the last two years, I have asked the City-County Council to take the necessary steps to provide adequate funding for police operations, but the council refused and relied on one-time funds for ongoing operations,” Ballard said. “That decision played heavily on S&P’s ratings decision.”

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  • Adolf Hitler being Democratically elected
    Hitler wasn't "elected," democratically (lower case d) or otherwise. He refused anything but the chancellorship, and Hindenberg (German president) gave it to him. Von Papen and others thought they could keep Hitler in check. After Hitler was already in office, there was an election to approve the fait accompli. The vote, of course, was overwhelmingly in favor. But it was not "democratic." Bush II's first term was the result of the Chief Justice of the Supreme Court (Renquist) giving Bush the victory. Bush lost the popular vote.
  • Re: Evan
    Please forgive. He is an ignorant 18 year old that thinks he knows all about economics based upon his Into to Econ class. He also pretends to be BFFs with Mayor Ballard.
  • Hilarious
    Oh, Evan. I'm not sure which is funnier. You, with your clear lack of both Constitutional understanding and basic economics, calling other people stupid or the rapidity with which you invoked Godwin's Law.
  • Lol
    After campaigning on "no tax increases", mayor wants democrats to bail him out with a tax increase. Good one mayor!
  • It Has Begun
    So sorry that things aren't going as well as you had hoped in Indy, Evan.
  • The other side has been in control since 2007
    The Liberals have been in control since 2007. Indianapolis was fortunate to not be taken over by it until 2011 and the democrat council majority came into power. Oh wait Jose Evans switched parties and I wonder why........... 2nd the liberal agenda was only slowed down to a crawl after Republicans took control of the house in 2010 and erased the filibuster proof majority in 2010. Then Indiana was smart enough to remove democrats from power in 2010 and make them completely powerless in 2012. Oh and if you think the other side deserves to have a voice in the conversation you really need to take a look at Illinois. Liberals control every level of government in Illinois and its beyond a sad pathetic mess. Stupid politicians and the people that elect them don't deserve a voice. Democracy is fine until the stupid and ignorant take control. Aka Adolf Hitler being Democratically elected as chancellor of Germany in 1933. The Nazi's were *educated* yet they committed some of the worse acts in human history. So don't lecture me on education and the other side has good ideas......... Communism and Nazism are really the same thing. Remember Stalin was just as bad as Hitler.
    • Sheesh
      Evan, doesn't being so angry get exhausting? If people like you would take the time to educate yourselves and perhaps even entertain the thought that maybe "the other side" has a good point, we might be able to move the country forward. This isn't the junior high football state championship where you're required to mindlessly hate the other team.
      • Take the liberal agenda to Chicago
        pam can this unbalanced budget democrat propaganda. Also TIF funds are used for development. Would you rather Indy look like Detroit? Please.......... Also TIF funds aren't focused on just companies that give to Mayor Ballard.
      • It's not that bad.
        What do these ratings really mean? Detroit's current rating is a C- or CC. July 19 (Reuters) - Standard & Poor's Ratings Services cut its rating on Detroit's general obligation debt to 'C' from 'CC' on Friday, and gave the bankrupt Michigan city a negative outlook.
      • wrong assesment
        The present At Large councilors did not sell the City's assets, the water co, to boost and create a false sense of financial stability (credit rating for two years). Now that the budget again presented by the Mayor was unbalanced and the council had to fix it, the Mayor wants to blame the Dem council for his lack of financial planning. Need to look deeper that the Council. Maybe at all the money we are giving away through TIF funds to builders who make large donations to Ballard when he cries.
        • What a surprise
          The Conservative didn't read past the headline. I'm so shocked.
          • Democrats say goodbye in 2015
            Another consequence of a Democrat city-county council. Thank you Indiana statehouse for removing the stupid at large seats.

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