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NEW HAVEN --  With the dire financial straits our state is facing, Moody's Investor Services is placing 26 Connecticut communities and three school districts under review for a credit downgrade and is assigning a negative outlook for the credit ratings for another 25 municipalities, including New Haven.

But, Mayor Toni N. Harp (D-New Haven) is actually pleased with her city's outlook. 41 percent of New Haven's revenue comes from the state.

"Luckily we were able to be one of the communities to get the educational cost sharing grant through the governor's executive order," said Harp. "It's about $125 million. I mean, it's a lot of money."

Moody's Investor Services presently has New Haven's credit rating at an A-.

"They're going to keep the rating the same, but to they're going to give a negative outlook," she said.

The lack of a state budget hurts the outlook.

"It might make it harder for us to raise the kind of revenue that we need for our capital budget," said Harp.

Most believe this budget mess is embarrassing.

"It's the talk of the town," said Robert Xeller of Madison. "It's not just in these little towns. I mean everywhere. It's everywhere, we can't get our stuff together."

Of course, with a decreased credit rating, that means interest rates on loans communities must pay back are going to increase.

"We are hoping that our taxes will not go up and if they do that it's for the right cause: libraries, schools and things like that we care the most because of our children," said Dorota Xeller of Madison.

And, with no budget, communities must reduce their obligations.

"If you can't pay the salaries, and you don't have the money, the only choice is to lay people off," said Attorney Gerald E. Farrell, Sr., Wallingford Town Attorney.

Mayor Harp says the longer this state budget battle continues, the more concerned she grows. That is due in part to 53 percent of New Haven's property is tax exempt. Therefore, the city cannot rely on property taxes to pay bills.

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