As expected, the last of the three top financial credit agencies today action on Los Angeles' credit rating, downgrading it. The move by Standard and Poor's follows Fitch's downgrade in November and Moody Investors Service's "negative" financial outlook last week, the latter which prompted the beginning of 3,000 job eliminations, bringing the total to 4,000 positions. S&P acknowledged the city's actions to address the budget crisis through layoffs, leases and a three-year budget plan, but were still concerned about the city's structural deficit, reported the LA Times.
Ratings help determine the interest rate a City must pay on its bond issues, which aid the city's budget as taxes are collected during the first half of a fiscal year. With a lower rating, the cost of borrowing is higher, costing more taxpayer dollars.S&P also took action on another local city today, upgrading Burbank's credit rating to "AAA," the highest grade possible. "S&P credited the City of Burbank with a strong local economy and steady tax base growth and noted its convenient, attractive location in the greater Los Angeles area," a city press release read. "Burbank’s high unreserved general fund balance, strong income levels and very low debt were also major factors in the new ranking, according to S & P."
“Burbank has been more resilient due to the foresight of the current and previous City Councils who have built a strong and diversified economic base and adhered to sound financial policies," said City Manager Mike Flad.
