The rating on the Swiss City of Lausanne reflects its solid budgetary performance and tight cost control, as well as its wealthy and diversified economy. Offsetting these factors are the additional costs transferred by the canton, the city's cyclical revenues, and a high debt burden, as well as the poor financial profile of the city's pension fund. Lausanne's operating surplus (before amortization) stabilized at 9% of operating revenues in 2007, on the back of good cost control and dynamic--albeit fairly volatile--tax revenues. Despite its high operating margin, the city reported slight financing requirements in 2007, accounting for 1.8% of total revenues, primarily driven by a rise in capital expenditures. In 2008, the Canton of Vaud (AA-/Stable/--) has pushed expenditure responsibilities
