The 'BBB' rating on the city of Philadelphia, Pa.'s GO bonds series 2006 reflects the following weaknesses: The city's financial condition is weak, but improving. The fiscal 2005 unreserved deficit balance on a GAAP basis measured $36 million, and on a legally enacted budgetary basis, the city had an accumulated surplus of $96 million. Fiscal 2006 operating results indicate a sizable $105 million budgetary basis operating surplus. There are continuing long-standing fiscal problems at the Philadelphia School District and Philadelphia Gas Works (PGW), which could cause the city operating stress. Income levels are below average, with per capita effective buying income at about 91% of the national level. Overall net debt burden is high, due in large part to significant
