Standard & Poor’s Assessment of Long Beach Reports Stable Financial Outlook
2012-10-31 · By Editor
Standard & Poor’s has released its assessment of the City of Long Beach’s credit rating, reaffirming an AA- “Strong” rating with a stable outlook. Ratings by Standard and Poor’s, one of the world’s largest bond rating agencies, are used by financial markets to determine the City’s borrowing cost and are an indicator of financial health.
“This report is a confirmation of Long Beach’s fiscal responsibility and prudent stewardship of public dollars,” said Long Beach Mayor Bob Foster. “Long Beach has a history of addressing our budget shortfalls every year through managed structural budget reductions, without relying on reserves or one-time funding sources that can lead to financial stress.”
In the report, Standard & Poor’s noted the City’s “Good financial performance, including managing through a period of softening revenue streams, with reserves of at least 10% of expenditures recently.” The report also stated “The stable outlook reflects Standard & Poor’s opinion that Long Beach will likely sustain its good financial performance, including the maintenance of strong reserves, during a period of revenue stress.”
California cities have come under increased financial scrutiny after the high-profile bankruptcy filings of Stockton, Mammoth Lakes and San Bernardino and because of California’s generally adverse financial environment for cities. In contrast, today’s reaffirmation of the City’s credit rating highlights Long Beach’s proactive approach to financial management. The City has addressed slow growth in revenues and increasing costs through targeted structural budget reductions, while maintaining appropriate financial reserves.
Over the past two years, the City has eliminated $37 million in structural deficits while maintaining its emergency reserve as required for sound financial management. During this time, the City has used one-time revenue sources to strengthen its emergency reserve from $26 million to $31 million.