The black eye of junk bond status finally left the face of Pittsburgh this week, when the last of the major credit agencies lifted the city's credit rating, almost a year and a half after they first dropped it below investment grade.

Bond rating agencies started dropping Pittsburgh's rating to junk status in October 2003 when city officials began worrying publicly about bankruptcy. Recently the agencies have reversed course, citing the approval of new payroll and occupation taxes, and the government cuts in the Act 47 recovery plan.

Standard & Poor's pulled the city out of junk status in December, Fitch did in February, and on Thursday Moody's Investors Service did the same.

The agency only upgraded the city's rating to a medium grade -- from Ba1 to Baa3 -- and warned of major problems with the city's debt. It also said the city is on track to only collect 80 percent of the new payroll tax revenues it has projected for the year, due to delays in getting all businesses to pay the tax, which could leave the city with an $8 million shortfall for 2005.

Mayoral spokesman Craig Kwiecinski still applauded the upgrade, calling it "more positive news that Pittsburgh is turning the financial corner."

A better rating should make it easier for the city to borrow money, mostly to pay for long-term infrastructure costs, such as street, sidewalk and bridge repair, and for fire trucks and other public safety vehicles.

Currently, the city is down to nothing to pay for capital improvements. It had earmarked $7.5 million from its operating budget to pay for infrastructure repairs this year, but that was erased during the drive for state budget help in November to keep the 2005 budget balanced.

The city is considering refinancing existing bonds to free up some $6.5 million to pay capital expenses and build up its fund balance this year. City Council is set to debate the matter next week.

The $6.5 million in refunding savings -- on $197 million in bonds -- meets a 3 percent savings threshold for bond refinancings set forth in the Act 47 recovery plan, said city fiscal adviser Linda Eremita, managing director of National City Investments.