The rating on Lausanne reflects our view of the "predictable and well-balanced" institutional framework for municipalities located in the Canton of Vaud (AA+/Positive/--), including Lausanne. The rating also factors in Lausanne's wealthy and diversified economy, the city's "positive" financial management, its large portfolio of sellable assets, and its limited contingent liabilities. We consider that Lausanne's high tax-supported debt burden and its limited tax and expenditure flexibility constrain the ratings. The city's large, unfunded pension liabilities accentuate its heavy debt burden. Lausanne is Vaud's economic center. The city's economy is wealthy and diversified, with strong health and education sectors. Thanks to its economic resilience in a globally unfavorable context, Lausanne's tax revenues rose 2% in 2010 (excluding exceptional items). Moreover, the
