Wall Street Rates L.A. County Highly Even as Settlement Costs and Funding Cuts Mount

Los Angeles County earned top-tier credit ratings on its next round of borrowing even as it faces a nearly $5 billion legal liability and cuts to federal and state funding — an endorsement that county officials said Monday would let it borrow at lower interest rates and save millions of dollars.

Fitch Ratings assigned the county its top grade of triple-A, while Moody’s gave an Aa1, its second-highest long-term mark, according to the Los Angeles County Treasurer and Tax Collector. Officials said they expect a comparably strong rating from S&P Global Ratings later this summer.

The grades apply to the county’s $700 million in 2026-27 Tax and Revenue Anticipation Notes, Series A, scheduled for issuance on July 1. Such notes, like bonds, help governments finance infrastructure and other long-term investments and manage cash flow for day-to-day public services.

Government credit ratings function much like consumer credit scores. Strong investment-grade marks let the county draw a wider pool of investors and sell debt at lower interest rates, saving millions in interest payments, officials said.

In explaining the ratings, the agencies pointed to the county’s strong cash-flow management, financial operations and ongoing commitment to fiscal resilience amid mounting economic pressures: reduced federal and state funding, shifting national rules for public health care, and nearly $5 billion in settlement costs tied to thousands of childhood sexual assault cases under Assembly Bill 218.

“As the county confronts significant budget challenges, including potential federal funding reductions and mounting legal settlement obligations related to Assembly Bill 218, maintaining a strong credit rating is critical,” said Hilda L. Solis, chair of the Board of Supervisors and First District supervisor, in a statement. “Our disciplined fiscal management and long-term planning help protect the county’s financial stability and ability to deliver essential services.”