Feb. 20 (Bloomberg) — Jacksonville, Florida, with the third most underfunded pensions of the largest U.S. cities, is considering an unprecedented solution that may preserve its credit rating at the expense of its utility's.
Jacksonville, rated the second level of investment grade by Moody's Investors Service, wants JEA, which provides water and electricity to the state's most populous city, to contribute $40 million annually to help avoid a downgrade. The utility, ranked two steps lower and trying to dodge a cut of its own, says it can't afford the payment.
The city's effort shows how the creditworthiness of municipalities is under pressure with state and local government pensions underfunded by at least $1 trillion, according to a January report by the Nelson A. Rockefeller Institute of Government in Albany, New York. Taking money from JEA may ultimately help the city and hurt the utility, according to Wasmer, Schroeder & Co.'s Reid Tomlin.
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