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 city's cyclical revenues and a high debt burden, as well as the poor financial profile of the city's pension fund, which stands to be enhanced in the coming months through partial recapitalization. Lausanne's operating surplus (before amortization and provisions) stabilized at 8.5% of operating revenues in 2008, due to high margins at Services Industriels (SI), the city's utility department, and still dynamic--albeit fairly volatile--tax revenues. Lausanne achieved the steady operating margin despite additional expenditure transfers to the city, beyond the scope of the equalization system reform at the federal level.
