MILWAUKEE — Analysts said the decision by Fitch Ratings this week to lower the City of Milwaukee's bond rating to BBB+ from A reflected both the city's potential financial outlook and the ongoing uncertainty of state financial support.

According to BondView, bond ratings "determine the amount of investment risk and interest cost on bonds used for financing government project. These ratings, much like a credit risk evaluation, assess [the current state of the economy, debt structure, financial condition and anagement practices] in determining the degree of interest and risk." 

"That means they have looked at the city's finances and its upcoming financial challenges, and determined not by any stretch of the imagination that the city is at a junk bond status [or] and there are extremely serious questions about its ability to repay its debt," said Rob Henken, president of the Wisconsin Policy Forum. "But they have essentially determined that the city is more of a credit risk than the last time it issued ratings about a year ago."

Henken added the ratings dip is likely a temporary one, assuming the state legislature finally makes a move, in part, to overhaul the state's shared revenue disbursements to communities statewide.

"This particular ratings agency has reviewed the legislation that is pending before lawmakers in Madison," Henken said. "There is an opportunity here, potentially, [through the legislation] that the City of Milwaukee would receive considerable relief in terms of both the opportunity to generate sales tax revenue plus the opportunity to receive more shared revenue from the State of Wisconsin."

Watch the full interview above.