Slaton, TX GO Bond And COP Ratings Placed On CreditWatch Negative On Very Weak Budgetary Performance
DALLAS (S&P Global Ratings) Dec. 6, 2018--S&P Global Ratings placed its 'A-' long-term rating on the City of Slaton, Texas' general obligation bonds and certificates of obligation outstanding on CreditWatch with negative implications. "We understand the city's budgetary performance has remained very weak despite expectations that near-term results would improve relative to fiscal 2016," said S&P Global Ratings credit analyst Amahad Brown. Slaton posted general fund operating deficits in audited fiscal 2017 and estimated 2018 results, which have further weakened the city's available reserve position, which was negative $687,000 as of fiscal 2017. In our view, the inability to align current revenues with current expenditures and improve reserve balances to positive levels could signal a structural imbalance, which has negative credit implications. Our view of potential credit deterioration also reflects management's inability to provide us with timely and sufficient information. While we take into account available information we have in our analysis of Slaton, additional clarity regarding the trends mentioned above could result in a lower rating. Therefore, we consider receiving the requested information necessary to maintain the rating, in accordance with our applicable criteria and policies. The requested information includes the fiscal 2019 budget, clarification on any recent budget adjustments, and near-term expectations for budgetary performance. Failure to receive this information within 45 days will likely result in our withdrawal of the affected rating, preceded, in accordance with our policies, by any change to the rating that we consider appropriate given available information. However, if we receive information that we consider sufficient and of satisfactory quality, we will conduct a full review and take a rating action within 90 days of the CreditWatch placement.