Understanding Municipal Bond Ratings
Municipal bond ratings assess a city’s creditworthiness and directly affect the interest rates it pays when borrowing. Agencies like S&P Global Ratings and Moody’s issue these grades, with higher ratings signaling strong financial health. A downgrade not only reflects concern—it costs cities more to borrow and weakens their financial position over time.
El Cerrito’s Financial Context
El Cerrito’s finances have been under scrutiny for more than a decade, and the city’s bond rating has steadily declined over that period.
In 2018, Karen Pinkos became City Manager. At that time, El Cerrito held an A- bond rating from S&P—a solid, investment-grade level. However, in the years following her appointment, the city’s finances worsened significantly:
- The city overspent
- Reserves were depleted.
- Long-term obligations remained underfunded.
Despite voters approving multiple tax increases, including a real property transfer tax (Measure V in 2018) and a recreation tax (2019), the city failed to demonstrate sustained financial discipline.
By 2020, the senior center had permanently closed, other services were cut, and the city was downgraded to BBB-, just one step above junk bond status.
📉 Bond Rating Deterioration Timeline
| Year | Rating | Notes |
|---|---|---|
| 2013 | A+ | Downgraded from AA- |
| 2018 | A- | Pinkos becomes City Manager |
| 2019 | BBB | Continued structural imbalance despite new tax revenue |
| 2020 | BBB- | Services cut, senior center closed |
| 2023 | BBB | Slight improvement; still below 2018 level |
Source: S&P Global Ratings
📄 State Auditor’s Oversight and Misunderstood “Recovery”
In March 2021, the California State Auditor listed El Cerrito among California’s top 10 most fiscally at-risk cities, flagging excessive spending and the city’s unwillingness to address deficits. This designation placed El Cerrito in the bottom ~2.5% of California’s 400+ cities.
In 2024, El Cerrito was removed from the high-risk list. However, this does not indicate financial strength—only that the city is no longer among the worst 10–15 performers. Removal from the list should be seen as a minimum threshold achievement, not a signal of long-term sustainability or fiscal health.
The Disconnect Between Taxes and Services
Since 2010, voters have supported a series of tax increases intended to maintain and improve services:
- Measure R (2010 & 2014) – Sales taxes
- Measure V (2018) – Real property transfer tax
- Recreation Tax (2019)
- Measure G (2024)
- (2026)– A planned (“forever”) tax
Despite these efforts, essential services have been reduced. The senior center remains closed. Road conditions and amenities like the Ohlone Greenway show limited improvement. Residents are paying more and receiving less.
Why It Matters
A declining bond rating reflects deeper issues: weak internal controls, deferred maintenance, lack of long-term planning, and reactive budgeting. While the 2023 upgrade to BBB was a step forward, the city remains two full notches below where it stood in 2018.
Unless El Cerrito aligns its spending with sustainable priorities and enforces financial accountability, residents risk further tax increases without meaningful service delivery.
El Cerrito Committee for Responsible Government (ECCRG) 