Standard & Poors yesterday upgraded Pittsburgh to BBB-minus from BB in response to efforts to reform the citys tax structure and restore budget reserves, affecting about $1.26 billion of debt.
The upgrade follows Fitch Ratings decision last Friday to put Pittsburgh under review for a possible upgrade. It rates the city BB. Moodys Investors Service rates the city Ba2 and has had it under review for possible downgrade since October.
The most recent rating actions come in response to efforts at the city and state level to reverse Pittsburghs budget problems, which led to it being downgraded to below investment grade. Last Wednesday, the City Council voted 9 to 0 to adopt an economic recovery plan that was developed by state officials under Act 47. Last month, the legislature passed a bill overhauling the citys tax code, which is expected to generate more revenues and make it easier for the city to attract new businesses.
The five-year financial plan projects a slow rebuilding of the citys financial reserves to $21.9 million at the end of 2009 from less than $1 million at the end of 2005.
While the council voted to adopt the proposed spending plan, they will not vote on a new budget until later this month. The citys fiscal year begins on Jan. 1.
You have got a recovery plan that has been established which gained ICA approval, said Standard & Poors analyst Jeff Panger, referring to the city financial oversight board. Because they got the approval they can tap short-term markets.
