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.)