Moody's Investors Service has downgraded D.C.'s general obligation bonds from "stable" to "negative."
Moody's did not downgrade the city's bond rating and there were no other change's to the District's ratings from the three major credit rating agencies.
The D.C. Office of the Chief Financial Officer said in a statement that the major issue behind the downgrade, which they say is the downsizing of the federal government, is beyond their control.
Moody's expects efforts to reduce the federal deficit, including federal workforce reductions and entitlement cuts, could have an big impact on D.C. and its finances.
It argues federal downsizing that has a negative impact on the District's economy and finances and erosion of the financial management practices that in turn might lead to a budget imbalance or draw downs of fund balance below acceptable levels could push the general obligation rating even further down.
However the service suggests rebuilding and maintenance of healthy fund balances, substantial improvement in the local economy--including robust population growth--increased resident employment and lower poverty levels, and the ability to access currently off-limits portions of the tax base could raise the rating again.