UPDATE 1-S&P cuts Fresno, California credit rating three notches

Aug 17 (Reuters) - Standard & Poor's Ratings Services downgraded Fresno, California's i ssuer c redit rating from A to BBB on Friday, saying the city's general fund has been persistently imbalanced despite cuts to its workforce and some revenue improvement.

S&P also sliced its rating on the city's lease revenue bonds three notches, from A- minus t o BBB- minus. The agency's outlook is negative.

"The city's budget flexibility has become increasingly narrow given the level of previously enacted workforce reductions, closed public safety contracts, low general fund balances, and weak general fund liquidity," S&P credit analyst Misty Newland said in a statement.

The triple-notch downgrade comes on the heels of similar actions by other major ratings agencies.

On July 23, Moody's Investors Service cut the city's credit rating to A3 from A2, citing concerns about Fresno's budget, likely internal borrowing and its reliance on labor concessions that could be hard to achieve.

Earlier in July, Fitch Ratings downgraded Fresno's general obligation bond rating by one notch to A-minus.

Like other California cities, Fresno has been forced to cut payroll and impose furloughs to cope with lean revenues.

The city of about 500,000 residents in California's Central Valley has tapped into reserve funds and trimmed costs to try to balance its books.