Investor Service Raises County’s Bond Rating

In an indication of Los Angeles County government’s hard-won fiscal stability, Moody’s Investor Service on Monday upgraded the county’s bond rating.

“It’s a recognition of the progress they’ve made,” Kenneth Kurtz, senior vice president at Moody’s, said of the decision to raise the rating of the county’s general obligation bonds from A2 to A1. “It’s a big step forward from where they’ve been.”

Kurtz cited improvements since the county flirted with insolvency in 1995. Especially noteworthy, he said, was the county’s move to decrease its dependence on its pension system to obtain a balanced budget and the improving economic forecast for Los Angeles County overall.

Moody’s did note that the county is still hampered by its vast number of residents who are dependent on government services and a structural deficit in the health department, which was the catalyst for the 1995 crisis.

In a sign that the county is not out of the financial woods, the director of the health department is scheduled to report to the Board of Supervisors today on why his department has fallen far short of its savings goals for this year. Those anticipated savings were one reason the federal government agreed to bail the county out of its dire financial situation in 1995.

Nonetheless, Supervisor Zev Yaroslavsky said the upgrade shows that the county is on the right track.

“We are in a much stronger financial situation than we were three years ago due to strict discipline,” Yaroslavsky said. “This is not an accident. It is the result of some difficult, painful and sacrificial decisions the board and the administration have made.”