Moody's Investors Service and Fitch Ratings recently
downgraded the City of Los Angeles's general obligation debt to
Aa3 and A+, respectively. Standard & Poor's has not reduced
its AA- rating on L.A.'s G.O. debt, but recently put the debt
on a negative credit watch. Fitch also downgraded certain of the
City's certificates of participation and lease revenue
bonds.
The rating downgrades are thought to stem from L.A.'s budget
woes and the recent standoff between Mayor Villaraigosa and the
City Council over job cuts and utility rates. Los Angeles has
projected a $148.9 million budget deficit for fiscal year 2009-10,
and the Mayor's budget proposal for fiscal year 2010-11,
released April 20, 2010, paints an even bleaker picture. In his
State of the City address, presented in conjunction with the
release of his new budget proposal, the Mayor warned that
"painful" layoffs and service cuts would be required to
bridge the $485 million budget deficit for the coming
