Another Downgrade in City’s Credit Rating

Standard and Poor’s “Suspends” City Ratings as Evidence of City’s Fiscal Crisis Mounts

SAN DIEGO – Today, Standard and Poor’s Investment Service suspended its ratings and underlying ratings on the City of San Diego’s General Obligation bonds—citing the lack of an estimated release date for the city’s fiscal 2003 audited financial statements. According to the investment service, this delay creates an uncertainty regarding the city’s true financial condition. These problems are the same issues that have been raised over the past seven months by the Performance Institute—and have been the subject of an ongoing federal financial investigation.

“Today’s credit downgrade is yet another sign that the City’s financial house is in complete disarray. The City must take immediate action to address its budget problems and fully and accurately account for taxpayers’ monies,” noted Carl DeMaio, President of the Performance Institute.

“A downgrade in the City’s credit rating has huge implications for taxpayers. Besides signaling that our City has failed to manage its finances properly, the downgrade will result in higher interest payments and fees on the City’s debt. Those monies come right out of taxpayers’ pockets and are an incredible price to pay for the City’s failure to properly manage its finances,” reminded DeMaio. “It puts a direct price tag on the City’s poor financial management.”

DeMaio agreed with the logic behind S&P’s decision to link the suspension to the failure to issue the FY 2003 Financial Statements, noting: “Taxpayers should be very alarmed that the City is unable to account properly for taxpayer monies. We are now six months late with our FY 2003 financial report and are being asked to spend an additional $1.2 million to reproduce financial statements that other cities get right on their first try.”

As the city’s recent budget process concluded, the Institute released the San Diego Citizen’s Budget Plan which articulates 10 budget reforms and cost saving measures that would restore the city’s fiscal health. To date, the City has yet to take action on the 10 Reforms. Based here in San Diego, the Institute is a national government reform think tank that promotes the principles of performance, transparency, competition and accountability in government. Additional information on the San Diego Citizens’ Budget Project can be found at www.sandiegobudget.org.

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