Credit Agencies Warn City On Budget
Two major credit-rating agencies have warned the city of Los Angeles that its lack of action in dealing with a more than $200 million deficit will result in even lower credit ratings -- and more expensive loans.
A representative of Fitch Ratings told city administrative officer Miguel Santana the firm was unimpressed with the council's foot dragging on the budget last week (the body put off any hard decisions for 30 days, at the cost of $338,000 a day in extra red ink): "This is an amazing opportunity for the elected officials to show leadership and for a valid reason," the unnamed rep is quoted as saying by Santana in a city memo obtained by LA Weekly. "According to the press, though, they can't seem to step up and make decisions. So if it can't be done now, then when?"
Indeed, we lambasted the council for its failure to show leadership in the face of the worst budget crisis anyone on the council has seen. We wrote of the council last week, "If terrorists attacked L.A., many of these folks would be fighting over the nearest copy of My Pet Goat."
In particular, Fitch was concerned about the council's unwillingness to cut 1,000 people from city payrolls, the mayor's contentious claim to be able to do so, the likelihood that the city will dip into its reserve funds, and a lack of consensus among the mayor and council President Eric Garcetti, whom the agency singled out for his opposition to privatizing city parking garages and raising trash fees for low-income, elderly residents.
Likewise, Moody, another agency, "expressed concerns that the City Council had not adopted the necessary budget-balancing recommendations provided in the CAO's mid-year report, as it had in years past."