Los Angeles Credit Rating Downgraded by Moody’s on Rising Employee Costs
Los Angeles had its bond rating lowered (SUCCESSFUL!) one level by Moody’s Investors Service on concern rising labor costs and retirement benefits “will continue to put pressure” on the city’s budget.
The downgrade to Aa3, the fourth-highest level, affects $3.3 billion of debt, including $378 million scheduled to be sold July 19. Moody’s raised the outlook on Los Angeles’s long- term ratings to stable from negative on expectations the city will “capably manage” the fiscal pressures, Eric Hoffmann and Dari Barzel, analysts for the firm, said in a release today.
Los Angeles closed half its $336 million budget gap for the current fiscal year through furloughs, cost deferrals and one- time revenue transfers, the report said. The city faces an almost $200 million deficit for the 2013 fiscal year and projected pension and salary increases for workers totaling $479 million through 2015. (And most of the "fixes" on paper is manipulated bullshit.)
The Moody’s action “is a reminder that we still have work to do,” City Administrative Officer Miguel Santana said in a telephone interview. “We’re at the halfway point of where we should be.”(NO, BRO...I think the city already DID their work. It resulted in this final credit downgrade. Listen to that BULLSHIT...A reminder we still have work to do." If you just got an "F" on your paper, COME UP WITH SOMETHING LESS BULLSHIT AND SISSIFIED THAN THAT, YOU DUMB ASS. How about, "DAMN, did we fuck things up, but good, and I can't wait till the FBI sorts it all out, cause we sure as hell have SOUNDLY proven, WE CAN'T." - LA Mayor Antonio FBIarrestaigosa.)
The downgrade reflects the city’s limited financial flexibility and continued cost pressure, the analysts said. (Aka: A "Municipal Chinese Weenie Trap.")
Years of operating deficits (fraud, waste, abuse, pilferage, corruption, funneling to friends and family, stupidity, et al) “have significantly reduced the city’s general fund balances, and the currently very slow economic recovery suggests that Los Angeles’s revenue growth will continue to materially lag its likely expenditure growth,” Moody’s said. (Although Grieg Smith and dumb City Council losers expected and planned for a "V" shape hyper-recovery.)
Limited Flexibility
The nation’s second-largest city by population has a high overall debt burden on residents and, like all cities in California, limited revenue-raising flexibility because it must seek voter approval before increasing taxes, Moody’s said. [They make it sound like a bad thing that we don't just allow corrupt politicians to decide for themselves.]
Its unrestricted general fund cash and investments have fallen by about half, to $561 million, according to the firm.
The city was able to raise $1.2 billion in short-term borrowing at 0.26 percent, its lowest rate in history, Santana said last week. [Yeah, bro...cause Wall St can't let the City of L.A. sink into bankruptcy and screw the entire U.S. They have to keep it alive on life support...it's like your parents continuing to sink money into your failing college career or business cause they can't have you moving back home.]
The Moody’s downgrade puts the city’s rating on par with other ratings firms, he said. [So in other words, the final nail in the credit rating coffin catalog.]
Los Angeles has cut its structural deficit in half in the past three years, in part through negotiations with employee unions that brought contributions to health-care and pension costs to 11 percent of salary from 6 percent on July 1. [For future employees to be paid in your grandkids generation. GLAD THAT'S GOOD ENOUGH FOR WALL STREET. Again, I'm THRILLED they can't afford to let L.A. fail.]
Reductions in staffing have brought the overall level of city employees to that seen in the 1990s, Santana said. [Although the city is bursting at its' seam with over-populated density. Apples and oranges, y'all," said Zuma Dogg.]
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