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Thursday, November 18, 2010

San Francisco's Credit Rating Takes a Hit

Posted By on Thu, Nov 18, 2010 at 3:25 PM

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In our recent cover story on San Francisco's burgeoning, billion-dollar health care and pension obligations, we included the following hilarious assessment from Moody's Investor Services:

"Our Aa1 rating on the city's [general obligation] bonds assumes that

the city will prepare a long-term solution to this funding challenge."

But making sure today's expenditures can be covered by tomorrow's cash reserves isn't San Francisco's thing -- in fact, it's hard to overstate how much that isn't our thing. And, yesterday, Moody's responded. The service downgraded the city's credit rating from Aa1 to Aa2, meaning the city will have to pay a higher interest rate on the scores of millions of dollars of bonds it's set to take out.

Moody's report cited the city's threadbare finances, its ongoing structural deficits and -- surprise, surprise, surprise -- the lack of political will to do much about it.

Notably , the explanation behind the downgrade specifically mentioned the defeat of Proposition B, which would have required city workers to contribute more to their pension and health care costs. Per the report: "The defeat in the election earlier this month of a local pension and health care cost control measure suggests that little near-term fiscal improvement is likely to result from external political pressure."

In other words, the terrifying economic conditions Prop. B purported to address weren't a goddamn joke. Sadly, Moody's earlier assessment that the city would undertake any sort of long-term strategy to address them was.

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About The Author

Joe Eskenazi

Joe Eskenazi

Bio:
Joe Eskenazi was born in San Francisco, raised in the Bay Area, and attended U.C. Berkeley. He never left. "Your humble narrator" was a staff writer and columnist for SF Weekly from 2007 to 2015. He resides in the Excelsior with his wife, 4.3 miles from his birthplace and 5,474 from hers.

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