The agency cited a chronic imbalance in the water and sewer funds and assigned a negative outlook, raising the prospect of further downgrades.
S&P Global Ratings on May 4 lowered the Town of Purcellville’s general obligation bond rating from AAA to AA+ and assigned the town a “negative” outlook, ending a roughly two-year stretch at the highest possible mark and signaling that another downgrade could follow.
The action lands one week before the Town Council is scheduled to adopt the fiscal year 2027 budget, which proposes water rate increases of 16.5 percent, wastewater increases of 14.5 percent, and a $3.5 million transfer from the General Fund into the utility funds.
A bond rating works much like a credit score, except it is assigned to a town rather than a person. AAA is the top of the scale and AA+ sits one notch below. Both remain investment grade, but a higher rating means a lower interest rate when the town borrows. A “negative” outlook tells investors that another downgrade is possible if conditions do not change.
Why the rating moved
S&P pointed directly to the structure of Purcellville’s finances. The agency identified an “ongoing operating imbalance” in the water and sewer funds, driven by capital needs that have not been matched by revenue. The report said the town has been using General Fund resources to prop up the utility funds, a pattern S&P expects to produce General Fund deficits in fiscal years 2026 and 2027.
The agency also flagged the lawsuits and criminal cases involving Town Hall, including matters tied to Vice Mayor Carl “Ben” Nett and Town Manager Kwasi Fraser, who has been on administrative leave since July 2025. S&P said it sees at least a one-in-three chance of another downgrade if the town cannot show a credible plan to restore balance and rebuild reserves.
What it means for residents
The downgrade does not change interest on bonds the town has already issued, and it does not directly change current utility bills or property tax rates. The change matters when the town next borrows or refinances, where a lower rating typically means a slightly higher interest rate. Over the life of a multi-decade bond that gap can add up, with costs that compete inside future budgets against police, public works, parks, and routine services.
How the town got here
The decision reverses ground gained in 2024, when Fitch Ratings upgraded Purcellville to AAA after the FY 2025 budget raised water and wastewater rates by 16 and 18 percent. After the 2024 elections, a new council majority voted to lower utility rates by 9 and 11 percent and to lean on General Fund revenue and meals tax dollars. Council Members Erin Rayner, Caleb Stought, and Kevin Wright opposed that approach and aligned with Stantec’s recommendations for steeper rate increases. Mayor Christopher Bertaut, Vice Mayor Nett, and Council Members Carol Luke and Susan Khalil have argued the recommended increases are not sustainable for residents.
Reactions
Council Member Erin Rayner, who has spent years warning that the majority’s approach put the town’s bond ratings at risk, called the action a serious setback that traces directly to recent council decisions.
“This downgrade is serious and has real implications for our town’s financial future,” Rayner said in a statement.
“For several years, I raised concerns about the financial direction we were heading and the risks that came with it. This outcome reflects a series of decisions that moved us away from a stable, long-term financial path.”
“In 2024, we put forward a plan to move the town toward structural balance and strengthen our financial position. Instead of building on that progress, the council majority chose a different direction, and we are now seeing the consequences of those choices.”
“This did not have to happen,” she said.
“Now the focus needs to be on restoring financial stability. That requires disciplined decision-making, greater transparency, and a renewed commitment to long-term planning. Our residents deserve a more responsible path forward.”
Interim Town Manager Tony Sabio said the report underscores the need to bring the Town’s finances back into structural balance and pointed to a multi-year plan already underway to do so.
“S&P’s report highlights the need to restore structural balance across the Town’s utility and general funds,” Sabio said in a statement. “The Town is advancing a disciplined, multi-year plan to align utility revenues with actual system costs, reduce reliance on interfund support, and strengthen long-term financial and capital planning. Key actions include implementing phased rate adjustments, adopting a systematic long-range utilities CIP plan, and establishing a phased CIP project schedule to reduce future debt service.”
“As part of this effort, the Town is working to codify these practices to reinforce a sustained commitment to structural balance.”
What comes next
S&P said the outlook could return to stable if Purcellville brings its General Fund and utility funds back into balance, addresses its water and sewer capital needs, and rebuilds reserves to levels comparable with peers. The FY 2027 budget is scheduled for adoption next week, though the council has not publicly indicated whether the S&P report will alter its plans.
