Thursday, June 11, 2009

Ohio budget crisis leads to lower bond rating

Gongwer News Service reports that, as the conference committee of the General Assembly meets to hammer out a final budget for the 2010-2011 biennium, Ohio general obligation bonds have been downgraded from AA+ to AA. According to Fitch, the ratings service: "The downgrade reflects the long-term deterioration in the state's economy; in particular, the structural decline of the state's large manufacturing sector and the resulting negative impact on state financial operations."

$40 million in coal-development bonds slated for sale next week also received AA ratings. However, Fitch stated that the long-term ratings outlook was revised from "negative" to "stable." "The state's financial management is sound and the rating incorporates the expectation that even with revenue declines the state will balance the budget."

Doing so will probably drain the State's $1 billion Budget Stabilization Fund and require the committee to find an additional $2 billion in spending reductions or tax increases.

Of course, if the Feds would back off its unfunded mandates, much of the deficit could be removed without doing either.

Virtual buckeye to PathIveMade at the Ohio Freedom Alliance.

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