PARIS – Because the town’s unreserved general fund has dwindled over the past few years, a global rating agency has dropped the town’s rating by one notch, which puts upward pressure on borrowing rates.

“It’s a substantial drop,” Steven Murphy, managing director of Standard & Poor, said Tuesday as he looked over reports on the town’s general fund balance. He said the fund, which is what towns fall back on in case of emergencies, has dropped from $1.3 million in fiscal year 2002 to $389,000 in fiscal year 2005.

“Borrowing money is going to be more expensive,” Murphy said. “The weaker the credit rating, the more expensive it is.”

Town Manager Sharon Jackson did not return phone messages left for her before the end of the business day Tuesday. Barbara Payne, chairwoman of the Board of Selectmen, said she was not aware of the drop when she was reached Tuesday.

Standard & Poor issued a statement Dec. 22 explaining that it had lowered by one notch the rating of Paris’ $2.2 million in bonds from “A-” to “BBB+.” Payne said the next selectmen’s meeting is Jan. 8. It is possible the board will discuss the matter then.

Murphy said it appeared the fund had decreased because of a shortfall in the 2005 excise tax and state homestead exemption revenue.

“There was a $354,000 decrease in fiscal year 2005, which got them down to $389,000,” he said. “There was a shortfall in excise tax and homesteading. That was a revenue issue, not a budget issue. Possibly that was somewhat of a surprise; that is why you need to have money in the bank.”

Standard & Poor, which rates municipalities around the country, does not offer strategies for rebounding. But it can readjust the rating if something changes to affect a town’s finances.

Murphy said the prediction for 2006 in Paris was that the unreserved fund was going to grow again to $789,000 because of more revenues.

“Once we get the ’06 finances, we’ll see,” he said. “We can change the rating at any time depending on what information comes our way.”

He said on the surface the increase looks like good news, but one doesn’t know for sure until all the deductions have been calculated.

Not only did the excise tax and state homestead exemption revenue hurt the fund, but Murphy also pointed out that the economy and real estate market are in different shape than they were in 2002, which affects the tax rate value.