The City of Omaha’s AAA bond rating has been downgraded because of long-term problems with the city’s underfunded pension system.
Moody’s Investors Service announced Friday that it was moving Omaha to an AA1 rating. The agency said the city’s struggles with meeting its pension obligations was “not consistent with the expected financial practices of highly rated cities,” according to a press release from the Mayor’s Office.
The city’s current unfunded liability is $794 million.
Higher bond ratings mean the city can borrow money at a lesser cost.
Another rating agency, Standard and Poor’s, still gives Omaha a AAA rating, which means the city’s general obligation bonds are now considered “split” rated.
City officials said the news was disappointing and will have a long-term impact on city finances.
“Today’s decision by Moody’s is a devastating blow for the taxpayers,” Mayor Jim Suttle said in a statement. “We are unhappy with the rating, but it didn’t come as a total surprise considering the fact that we have an unresolved pension shortfall. I hope this will strengthen the resolve of all parties to make solving the unfunded pension liability the top priority in labor negotiations.”
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