Connecticut's general obligation debt ratings were downgraded Thursday by two financial-ratings agencies, one of which said the state now has "less flexibility to meet unanticipated revenue shortfalls" and "may be poorly positioned" should another economic downturn occur.

The State of Connecticut's general obligation debt, which previously had been given a respectable AA rating, was downgraded a notch by Standard & Poor's to AA-.

Secured debt was lowered from A+ to AA-, while moral-obligation debt went from A to A-.

Fitch Ratings Inc. similarly lowered its ratings for Connecticut bonds.

Two other ratings agencies — Kroll's and Moody's Investors Service — maintained the state's ratings in response to passage of Connecticut's nearly $20 billion budget for next fiscal year, but said the outlook was negative, meaning a lowered rating could follow. 

Ben Barnes, secretary of the state Office of Policy and Management, said in a statement that his agency is glad two agencies decided to maintain the state's higher bond rating.

"The agencies recognize we have begun to make necessary structural changes," he said. "But we all know, and are reminded today, that there is much more difficult work to be done."

Treasurer Denise L. Nappier was more blunt, saying in a statement, "it is high time for a sustained commitment to fortify the state’s financial footing, in the midst of persistent economic uncertainty.”

Lowered ratings usually mean higher costs for states that borrow money, but the Connecticut Mirror said Nappier isn't expecting a significant impact related to next week's anticipated $500 million bond issue.

Previous negative outlooks for state borrowings already had led to investors adjusting their expectations for bond prices, she told the Mirror.

"Substantial revenue shortfalls over the past year have left Connecticut with what we believe are low reserves and an increasing share of the budget devoted to fixed costs," S&P said in its bond-rating downgrade.

"The state is not budgeting to restore reserves in fiscal 2017, and projected out-year budget gaps in 2018 and beyond could prove troublesome in view of Connecticut's historically cyclical finances," the agency said.

At the end of this year, the state is expected to have only about $150 million in reserves, according to the Mirror.

Nevertheless, said the ratings agency, Connecticut's obligations have a stable outlook because of the state's strength, including high income levels.

But various fixed costs, including debt service and pensions "could potentially hamper the state's ability to make further budget cuts should new revenue shortfalls develop," S&P said.

"At the same time, tax increases enacted in the last two bienniums have constrained revenue-raising ability," the agency said.

Because of these constraints, S&P said, the state can achieve "near structural budget balance" during good economic times but "could fall out of structural budget alignment" during recessions.

Some debt, S&P noted, remains from the previous recession that ended six years ago.

Fitch, in its downgrade, noted Connecticut's track record of deficits, which are expected to hit $1.3 billion in the 2017-18 fiscal year.

This year's deficit is projected to be more than $250 million.

"It remains unclear whether the state has succeeded in fully aligning its budget to potential future economic and revenue performance," Fitch said.

l.howard@theday.com