Posted on 04/26/2025 9:19:54 AM PDT by DFG
Standard & Poor’s 500 downgraded its credit rating of city of Los Angeles general obligation bonds, citing its “weakening financial position and an emerging structural imbalance.” Los Angeles faces a $1 billion deficit, having burned through its once-record reserves in just two years.
Los Angeles Mayor Karen Bass is currently seeking a state bailout, but given that the state says it has “no capacity” for new spending commitments, it’s unclear if the funding will materialize.
S&P warns that if trends continue, it could further downgrade the city’s credit rating, which would further increase borrowing costs due to higher associated risk of default.
At AA-, the new rating still means the city’s bonds are investment grade and well above the junk bond threshold of BB+. However, without changes, S&P warns that there’s a one-in-three chance that it could downgrade the city’s credit rating yet again, reflecting anticipated difficulty in cutting runaway spending.
“The negative outlook also acknowledges various difficulties that could challenge the city’s efforts to achieve structural balance and restore its reserve fund in the near term: heightened litigation risk, limited flexibility to unilaterally reduce personnel costs under current labor contracts, and slowing economic growth, notwithstanding any additional lasting economic and revenue impacts from the wildfire events across Los Angeles County in January 2025,” wrote S&P.
Under the last budget from former mayor Eric Garcetti, Los Angeles had a record $648 million in reserves. Bass spent half of the reserves in just one year, leading City Controller Kenneth Mejia to warn in 2024 that the city is “going broke,” and would soon have so little reserves left it would be required to declare a “fiscal emergency” — highlighting how the city’s financial woes are structural and pre-date the January wildfires.
(Excerpt) Read more at economiccollapse.report ...
Downgrade means paying higher interest rates on bonds. (Or higher taxes, only if they can blame it all on Trump)
Yes they will probably try to blame it on Trump.
Democrats can’t realistically blame any Republicans for this. But i’m sure they will try to blame Trump.
notwithstanding any additional lasting economic and revenue impacts from the wildfire events across Los Angeles County in January 2025
Multi-syllable speak which boils down to "losing tax revenue as people (and Hollywood) move out."
(WHY can't these people speak plainly?)
Gavin will be boppin’ and weavin’ trying to blame anybody but him. The Dem’s would love to elect him.
California state law mandates that cities operate on a balanced budget, meaning revenues must equal or exceed expenditures.
Is Karen Bass back in Ghana?
But wait …. Newsome was just taking victory laps because Californias economy is the world 4th largest or some shit.
Well I guess more taxes to be raised.
“3rd-largest economy”
/s
Democrat Party rule for decades.
What? Izat some kind of sick joke?
Corrupt LA pols need to look in the mirror - and be investigated for "losing" taxpayer money earmarked for homeless:
"According to a report by the Los Angeles City Controller Kenneth Mejia, more than $500 million budgeted for homelessness programs was not spent during the 2023-2024 fiscal year.
Additionally, an independent audit commissioned by a federal judge found that Los Angeles city and county leaders could not account for the billions of taxpayer dollars spent on the homeless crisis last year.
This is on Mayor Karen Bass - but lots of other blame can be placed on Newsom as well.
Bass is the one who was partying in Ghana while the city burned, the specific reservoir set up for fighting LAs frequent wildfires had been empty for over a year and the fire hydrants were dry - and billions of our tax dollars, earmarked for the homeless went missing:
“An independent audit commissioned by a federal judge found that Los Angeles city and county leaders could not account for the billions of taxpayer dollars spent on the homeless crisis last year.”
Bass claims she “didn’t know” there were going to be high winds and high fire danger - while “little” people like me were getting high wind and high fire danger alerts on our phone every two hours for days in advance.
This is on her.
But, regrettably, the voters in LA will reelect her - with same results.
That’s funny. Gruesome Newsom says they have money falling off of trees in California. We need a fact check!
Riiiiiiiiiiiight..... Any type of "structural imbalance" to democRATS is when someone other than the good Marxist / Leninists have any substantial amount of money.
If you did not get your $$$ through USAID, you must have stolen it.
Since when did any Kalifornia democRAT, or any other democRAT, care about the rule of law?
Rules, regulations, laws are for "others."
If someone were to actually go to Court about the Los Angeles budget, the Judge would probably put the complainer in jail. How dare you try to balance a budget!
LA has been bankrupted by Democrat Rule.
Yep, if the Judges are going to look the other way for Democrats then this is what happens. Question, how long before the bond rating service gets sued by the California government? 🤔🤔🤔🤔 that will teach them to lower the City’s bond rating….. nice bond rating service you got there, hate to say anything happen to it…..
structural imbalance
They are bankrupt.
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