City Receives Glowing Financial Report
Posted by Damian Kelly on Oct 3, 2012 - 2:07:18 PM
WEST HOLLYWOOD—As multiple cities grapple with budget cuts in light of decreased revenues, the City of West Hollywood remains untouched.
The city is in an “exceptionally strong financial position” according to the California Cities Snapshot Report by Fitch Ratings, which reviewed the financial health of 40 California cities.
Bankruptcies in the California cities of Stockton, San Bernardino, and Mammoth Lakes this year prompted the review which took a snapshot of the credit characteristics of the 40 cities.
While discussing West Hollywood, the report had this to say: “The City’s strong revenue performance and extensive use of contracts for City services has helped to avoid many of the reductions seen in other California cities. Police, fire and library services are provided through Los Angeles County, limiting the city’s exposure to labor cost inflation.”
West Hollywood City Hall. Photo courtesy of Wikipedia
The city’s stable tax base, local economy, and high wealth levels were cited as reasons for West Hollywood’s excellent “AAA” implied ULTGO (Unlimited Tax General Obligation) bond rating.
According to Investopedia, AAA is “the highest possible rating assigned to the bonds of an issuer by creditrating agencies. An issuer that is rated AAA has an exceptional degree of creditworthiness and can easily meet its financial commitments.”
Fitch Rating’s report went on to complement the city’s participation in a pension plan.
“The City participates in a state-sponsored pension plan and has regularly met or exceeded its annual required contribution. Other Post-Employment Benefit (OPEB) liabilities are funded on a pay-as-you-go basis, but the city’s liability for such expenses is manageable.”
The report also was optimistic that West Hollywood would “maintain stable operations over the next several years, due to its substantial revenue base and the continuing strength of its local economy.”