Sept. 2 (Bloomberg) -- Los Angeles’s improving economy and fiscal management earned the second-most-populous U.S. city a positive outlook from Standard & Poor’s, which affirmed the metropolis’s AA- rating, its fourth-highest.
The city, with $22.8 billion in bonded debt as of mid-2013, had a reserve of 5.5 percent the general fund as of July 1, up from 5.37 percent a year earlier, according to budget documents. Larger-than-expected collections of taxes related to hotels and property augmented reserves and helped reverse recession-era cuts in services, Mayor Eric Garcetti said in his 2014-15 budget.
S&P revised its outlook from stable on Los Angeles general obligations.
“The positive outlook reflects our view of the city’s improved economic metrics, including unemployment, which is below 10 percent and continues to fall, and the city’s improving financial position, as demonstrated by a large surplus in fiscal 2013,” Jen Hansen, an analyst, wrote in a ratings outlook.
City Administrative Officer Miguel Santana and Jeff Millman, a Garcetti spokesman, didn’t immediately respond to an e-mailed request for comment on the change.
S&P noted the city’s “weak” position on other liabilities. As of June 30, 2013, the most recent actuarial valuation date, the Los Angeles City Employees’ Retirement System was 68.7 percent funded, according to its annual report.
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