S&P Slashes New Orleans' Credit Rating On "Structurally Imbalanced Operations"

S&P Global Ratings has downgraded New Orleans' general obligation rating to BBB+, the third-lowest investment grade, and issued a negative outlook. This downgrade is attributed to the city's structurally imbalanced finances and declining reserves. New Orleans is increasingly resorting to one-time measures, including borrowing, to cover short-term cash needs. The city projects a significant deficit for fiscal year 2025 and continues to rely on stopgap solutions. Analysts express concern that management projections have historically not aligned with actual financial results. This credit deterioration follows a similar downgrade by Moody's in February, which placed the city at the bottom of investment grade. The article suggests that New Orleans' decades of Democratic governance have contributed to its fiscal challenges. The last Republican mayor of the city served over 150 years ago. S&P anticipates that achieving true structural balance may take longer than the city's current projections.