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DALLAS (CBSDFW.COM) – Fitch Ratings downgraded the City of Dallas’ $1.7 billion outstanding general obligation bond rating from AA+ to AA.

In a news release, the City of Dallas explained Fitch based its action on concerns about the Dallas Police and Fire Pension System’s unfunded pension liability and the risks posed by the system’s deferred retirement option plan which have contributed to liquidity challenges for the system.

Fitch also changed the rating outlook from “stable” to “negative,” citing the need for successful pension reform efforts.

Mayor Mike Rawlings released the following statement:

“Obviously, Dallas Police and Fire Pension fund uncertainty is impacting how we are viewed fiscally. The great news is we can fix our issues if the City Council and fund membership make the prudent financial decisions that I’m hopeful will happen.”

The downgrade only affects the city’s general obligation debt.

Here is the complete report:

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