Moody's Investors Service upgraded Friday its credit rating for the city of Pittsburgh, pointing to a $23.6 million budget surplus created by spending cuts and debt restructuring.
The credit-rating agency raised the city's general-obligation debt of $841.91 million to Baa2 from Baa3.
It also removed Pittsburgh from Mood's Watchlist of cities and companies whose ratings are likely to change. The removal makes Pittsburgh a more secure, attractive option for bond investors.
Moody's analyst Geordie Thompson called the surplus "a nice jump" that suggests the city's financial picture is improving.
"They have another surplus projected for the end of 2006, and their mid-year numbers back up what they're projecting," Thompson said. "They seem to be righting the ship."
Thompson said the decision was made after Moody's reviewed Pittsburgh's 2005 audit and new Mayor Luke Ravenstahl's proposed $429 million budget for 2006.
Ravenstahl credited prudent fiscal management and sound budget proposals for the upgrade.
"This is good news for every stakeholder in the city, especially the residents and business community," the mayor said in a statement. "It signals that we are, in fact, on the right track to a better future."
Although Moody's has reaffirmed its stable outlook for the city, it noted that the continued high-debt burden, somewhat stagnant economy and tax base suggest an uncertain future.
Operating deficits are expected to reappear in 2009, 2010 and 2011. Debt collection for the new Payroll Preparation Tax --- which aims to capture money from for-profit local corporations exempt from previous business taxes -- came in $3.4 million below budget.
In addition, development efforts have been partially financed by off-balance sheet debt by the Urban Redevelopment Authority and the joint venture with the Sports & Exhibition Authority.
It was the first upgrade to the city's general-obligation debt by Moody's since March 2005, just a few months after a state-appointed oversight board signed off on a recovery plan to bring Pittsburgh back from the brink of bankruptcy.
Phone messages seeking comment from the oversight board, the Intergovernmental Cooperation Authority, were not immediately returned.
