A third major rating agency has docked San Jose's credit, citing concerns about the city's ability to manage its growing employee retirement bills.
Standard & Poor's lowered its rating from AAA to AA+ for San Jose's general-obligation bonds and from AA+ to AA for the city's lease-revenue bonds with a negative outlook, city officials reported Friday. The downgrade followed similar moves by Moody's Investor Service last month and Fitch Ratings last year.
"The rating change reflects our view of budget pressures that persist despite modest revenue growth, significant compensation reductions, and position eliminations," Standard & Poor's report said, citing issues with "the city's narrowing budget-balancing options and a currently slow economic recovery."
City spokesman David Vossbrink said the Standard & Poor's rating downgrade "was expected, but the change won't increase our financing costs since that was already triggered when Moody's acted last month."