What factor can positively influence a jurisdiction's credit rating?

A diverse and balanced revenue source can positively influence a jurisdiction's credit rating because it indicates financial stability and resilience. When a jurisdiction has multiple avenues from which it can generate revenue—such as property taxes, sales taxes, income taxes, fees, and grants—it is less susceptible to fluctuations in any single revenue stream. This diversification reduces risk and shows credit rating agencies that the jurisdiction has a more reliable and steady income flow, which is essential for meeting debt obligations and funding essential services.

Additionally, balanced revenue sources allow for flexibility in budgeting and financial planning. If one source experiences a shortfall, the jurisdiction can rely on others to maintain its financial health. This stability is an attractive quality to investors and rating agencies, leading to a potential upgrade in credit ratings, lower borrowing costs, and enhanced capacities to embark on new projects without straining financial resources. In contrast, high levels of outstanding debt, consistent late debt payments, or low levels of financial reserves typically signal financial strain or mismanagement, which can negatively impact a jurisdiction's credit rating.