Ongoing budget crisis lands Tacoma new financial black eye
Jul 10, 2012, 5:51 AM | Updated: 7:47 am
A major rating agency has downgraded bond ratings for the city of Tacoma in the wake of ongoing budget shortfalls. (AP file photo)
(AP file photo)
A major rating analyst has downgraded the city of Tacoma’s
ratings for two taxpayer-backed municipal bonds and placed
them on a long-term negative outlook, the second such
action in the last six months.
San Francisco-based global ratings agency Fitch cited the
city’s limited progress in addressing a deficit in its
general fund, adding the firm was concerned that actions
needed to solve the problem could require “politically
difficult service reductions,” the News Tribune reported.
Fitch Ratings downgraded Tacoma’s unlimited tax general
obligation (ULTGO) bonds to an A+ rating from what had
been AA rating. Fitch also downgraded the city’s limited
tax general obligation (LTGO) bonds to A from an AA-
rating. The city currently holds $23.8 million in debt in
ULTGO bonds and $82.3 million in LTGO bonds.
“To be dropped three notches in 6 months is not
unprecedented,” Stephen Walsh, the primary Fitch analyst
behind the downgraded ratings, told the News Tribune. “But
it’s certainly not typical, either.”
While it won’t cost taxpayers any more money, the move
will mean higher interest rates for the city on any new
bonds it issues.
Mayor Marilyn Strickland defended the city and blamed the
economy.
“The economic recovery is slow and this has affected all
levels of government across the country,” the mayor’s
statement said. “We remain focused on providing core
services to our residents and we will continue to look for
ways to reduce expenses.”
But Walsh noted the “economy is not the main driver” for
Monday’s downgrades; it’s the city’s financial management.
