Families aren't the only ones facing higher interest rates in tough times. Standard & Poor's downgraded the financial rating of cash-strapped Los Angeles, the city's administrative officer announced Tuesday.
The downgrade, coupled with the recent decision by Moody's Investors Service to put the city on its negative watch list, means "it's going to cost us millions of dollars more to borrow as a standard way of operating," City Administrative Officer Miguel Santana told the City Council.
Councilwoman Jan Perry asked why Standard & Poor's downgraded the city only several days after the council ordered the elimination of 4,000 general- funded jobs by July 1 to save $260 million to $300 million.
"It was an affirmative act," Perry said. "It was definitive, it was clear, it was on the record, it was a public vote. Why are we receiving this downgrade now?"
Santana responded that Standard & Poor's "wants to be sure that the plan that we laid out actually reaches fruition and is completed."
"…They're optimistic that we're going to be able to close next year's budget deficit, but they want to see action," Santana said.
The city's $212 million budget deficit is projected by city budget analysts to grow to $485 million next fiscal year, $785 million by 2011-2012 and almost $1 billion by 2012-2013.