S&P Global Ratings revised the outlook to negative from stable on the City of Eagle Lake , Texas’ certificates of obligation (COs) and affirmed its ‘A+’ long-term rating on the COs. The negative outlook reflects a one-in-three chance we could lower the rating if Eagle Lake continues to have deficits and its transfers to the general fund are not reflected in upcoming audits. A recent history of deficits attributed to timing and accounting adjustments. Management notes that the fiscal 2023 deficit resulted from American Rescue Plan Act grant revenues being recorded in 2022 while expenditures occurred in 2023. In addition, Eagle Lake’s $755,000 payable to the utility fund was reduced by $600,000 in fiscal 2024 and cleared in fiscal 2025.
