S&P Global Ratings revised the outlook to negative from stable and affirmed its 'AA-' rating on Tonawanda, N.Y.'s general obligation (GO) debt. Tonawanda's faith-and-credit pledge secures the bonds. The outlook revision reflects our view of the future budget challenges the city might face given its potentially limited ability to raise revenues sufficiently to meet growing fixed costs, particularly given the reliance on state aid and sales taxes. In the absence of a formalized policy, fund balances have declined more than 7% in the last three years, which management attributes primarily to fluctuations in health care insurance costs. The city attempted to reduce health insurance costs in fiscal 2019 while simultaneously raising the tax rate nearly 13%, resulting in an anticipated
