Wednesday, November 25, 2009

CITY OF L.A.’s CREDIT DOWNGRADED: L.A. credit rating takes a hit in light of grim budget outlook + L.A. Council will get briefing on finances, a day after city's credit rating is downgraded

L.A. credit rating takes a hit in light of grim budget outlook

by Phil Willon at L.A. City Hall | LA Times/LA Now!

November 24, 2009 |  6:15 pm

Los Angeles is about to pay a price for its financial woes.

The city’s credit was downgraded today by Fitch Ratings on $2.94 billion in debt, meaning that borrowing money will become more expensive for Los Angeles as it grapples with a $98-million current-year budget shortfall and faces the prospect of graver fiscal woes in the years ahead.

The financial ratings service credited Mayor Antonio Villaraigosa and the City Council for taking aggressive action to whittle down the budget gap, but added it wasn’t enough and that the ratings outlook for the city remains negative. Fitch Ratings, in a statement released today, said the “city’s economic decline, as evidenced by high unemployment, sales tax weakness, assessed value losses and high home foreclosure ... will impede financial recovery."

“It signals that we have some very difficult choices to make in the future," said Administrative Officer Miguel Santana, the city’s top budget official. “We simply cannot be spending at the rate that we have in the past."

Tomorrow, Santana is scheduled to brief the council on the downgrade, as well as the city’s financial status.

Council President Eric Garcetti said the rating downgrade shows that the city still needs to make sweeping structural changes to its $7.05-billion budget. Even after winning concessions from city unions, including pay cuts and an early retirement program, the city still faces a $98-million shortfall in the current budget year and a $408-million budget gap next year.

 

L.A. Council will get briefing on finances, a day after city's credit rating is downgraded

by Phil Willon at L.A. City Hall | LA Times/LA Now!

November 25, 2009 |  7:29 am

Mayor The Los Angeles City Council today will get what is expected to be a sober briefing on the city's financial condition, a day after L.A.'s credit rating was downgraded.

The city’s credit was downgraded  by Fitch Ratings on $2.94 billion in debt, meaning that borrowing money will become more expensive for Los Angeles as it grapples with a $98-million current-year budget shortfall and faces the prospect of graver fiscal woes in the years ahead.

The financial ratings service credited Mayor Antonio Villaraigosa and the City Council for taking aggressive action to whittle down the budget gap but added it wasn’t enough and that the ratings outlook for the city remained negative. Fitch Ratings, in a statement released today, said the “city’s economic decline, as evidenced by high unemployment, sales tax weakness, assessed value losses and high home foreclosure ... will impede financial recovery."

“It signals that we have some very difficult choices to make in the future," said Administrative Officer Miguel Santana, the city’s top budget official. “We simply cannot be spending at the rate that we have in the past."
Council President Eric Garcetti said the rating downgrade showed that the city still needed to make sweeping structural changes to its $7.05-billion budget. Even after winning concessions from city unions, including pay cuts and an early-retirement program, the city still faces a $98-million shortfall in the current budget year and a $408-million budget gap next year.

 

Photo: Mayor Antonio Villaraigosa. Credit: Los Angeles Times

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