City gets high ratings from credit agencies

Standard and Poors, Moody's and Fitch's rating services all gave the city their highest ratings for the notes used to provide enough cash flow for the $7.2 billion budget. This time out, the city needs to borrow about $1.2 billion. All three did issue warnings about L.A.'s financial outlook. Those included concerns about the still-high jobless rate and the structural deficit. From the Fitch report:

The city retains a range of budget options to achieve structural balance in the medium to long term, but meaningful budget impacts will require tough political decisions and further labor concessions. Fitch is concerned about the city's growing bank for overtime accrued by police officers. Accrued overtime hours which are not used for time off would likely be paid out when individual police officers resign or retire. While the city intends to reduce this liability through managed leave, those hours which are not used as leave will become more expensive over time given future agreed wage increases. Such a liability could be problematic if the economy does not support sufficient revenue growth.