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Fitch Warns of Tax Increases

You have to read a bit between the lines, but Fitch Ratings, in coming out with new bond and note ratings for the City of San Diego, warns that tax increases or other revenue enhancements are coming. The good news: Fitch gives the City's tax and revenue anticipation notes its highest F1+ rating. Fitch affirms prior ratings on other San Diego paper. Fitch's highest rating is AAA, second highest AA, third highest A. San Diego's general obligation bonds get a reasonably good AA-. But various certificates of participation and lease revenue bonds get an unimpressive A+.

Fitch says San Diego has a diverse economy and is a desirable location. But as the unemployment rate has jumped, "the City's key general fund revenue sources have declined," says Fitch. "Absent revenue increases to offset rising pension payment costs, the city is delaying progress toward achieving its reserve level policy goals." The City's five-year outlook forecasts operating deficits out to 2015. "While the City has a record of solving such deficits without adversely affecting its general fund balances and reserves, THE OPTIONS AVAILABLE TO IT WILL DIMINISH OVER TIME ABSENT SIGNIFICANT REVENUE INCREASES." (Emphasis mine.)

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You have to read a bit between the lines, but Fitch Ratings, in coming out with new bond and note ratings for the City of San Diego, warns that tax increases or other revenue enhancements are coming. The good news: Fitch gives the City's tax and revenue anticipation notes its highest F1+ rating. Fitch affirms prior ratings on other San Diego paper. Fitch's highest rating is AAA, second highest AA, third highest A. San Diego's general obligation bonds get a reasonably good AA-. But various certificates of participation and lease revenue bonds get an unimpressive A+.

Fitch says San Diego has a diverse economy and is a desirable location. But as the unemployment rate has jumped, "the City's key general fund revenue sources have declined," says Fitch. "Absent revenue increases to offset rising pension payment costs, the city is delaying progress toward achieving its reserve level policy goals." The City's five-year outlook forecasts operating deficits out to 2015. "While the City has a record of solving such deficits without adversely affecting its general fund balances and reserves, THE OPTIONS AVAILABLE TO IT WILL DIMINISH OVER TIME ABSENT SIGNIFICANT REVENUE INCREASES." (Emphasis mine.)

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4S Ranch Allied Gardens Alpine Baja Balboa Park Bankers Hill Barrio Logan Bay Ho Bay Park Black Mountain Ranch Blossom Valley Bonita Bonsall Borrego Springs Boulevard Campo Cardiff-by-the-Sea Carlsbad Carmel Mountain Carmel Valley Chollas View Chula Vista City College City Heights Clairemont College Area Coronado CSU San Marcos Cuyamaca College Del Cerro Del Mar Descanso Downtown San Diego Eastlake East Village El Cajon Emerald Hills Encanto Encinitas Escondido Fallbrook Fletcher Hills Golden Hill Grant Hill Grantville Grossmont College Guatay Harbor Island Hillcrest Imperial Beach Imperial Valley Jacumba Jamacha-Lomita Jamul Julian Kearny Mesa Kensington La Jolla Lakeside La Mesa Lemon Grove Leucadia Liberty Station Lincoln Acres Lincoln Park Linda Vista Little Italy Logan Heights Mesa College Midway District MiraCosta College Miramar Miramar College Mira Mesa Mission Beach Mission Hills Mission Valley Mountain View Mount Hope Mount Laguna National City Nestor Normal Heights North Park Oak Park Ocean Beach Oceanside Old Town Otay Mesa Pacific Beach Pala Palomar College Palomar Mountain Paradise Hills Pauma Valley Pine Valley Point Loma Point Loma Nazarene Potrero Poway Rainbow Ramona Rancho Bernardo Rancho Penasquitos Rancho San Diego Rancho Santa Fe Rolando San Carlos San Marcos San Onofre Santa Ysabel Santee San Ysidro Scripps Ranch SDSU Serra Mesa Shelltown Shelter Island Sherman Heights Skyline Solana Beach Sorrento Valley Southcrest South Park Southwestern College Spring Valley Stockton Talmadge Temecula Tierrasanta Tijuana UCSD University City University Heights USD Valencia Park Valley Center Vista Warner Springs
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