S&P Global Ratings has downgraded Los Angeles' long-term bond ratings due to a budget shortfall nearing $1 billion, indicating a deteriorating financial situation. The city's reserve fund fell below policy minimums, prompting concerns about ongoing fiscal management. Mayor Karen Bass acknowledged the downgrade as a result of economic challenges and inefficiencies, but she proposed structural reforms aimed at recovery in the 2025-26 budget. These reforms are critical for maintaining the city's bond ratings and preventing higher borrowing costs.
"S&P Global Ratings has downgraded L.A.âs bond ratings due to a nearly $1 billion budget shortfall, reflecting the city's weakened financial condition."
"The cityâs reserve fund has deteriorated, dropping to 3.22% of the general fund, below the minimum target of 5% set by city policy."
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