The par amount of the first series C refunding bonds is subject to change. The bonds will be sold via competitive sale on
In addition, Fitch affirms the 'AAA' rating on approximately
The Rating Outlook is Stable.
SECURITY: General obligations to which the state's full faith and credit are pledged.
KEY RATING DRIVERS
CONSERVATIVE FINANCIAL OPERATIONS: Financial operations are conservative, and the state maintains a well-funded rainy day fund (RDF). The state took repeated action during the course of the recession to address projected budget gaps, including raising tax revenues, cutting spending, and using rainy day and other balances.
STRONG DEBT MANAGEMENT: Debt oversight is strong and centralized, and the debt burden is moderate. The state has policies to maintain debt affordability, and the constitution requires GO and transportation bonds to amortize within 15 years.
PENSION FUNDING REFORMS: Pension funding levels have deteriorated, although the state has undertaken extensive reforms to pensions and other post-employment benefits.
BROAD ECONOMY: The state has a diverse, wealthy economy, benefiting from its proximity to the nation's capital.
CONTINUATION OF CURRENT PRACTICES: Sound fiscal management practices and the consistent maintenance of fiscal flexibility, including in the form of budgetary reserves, provide the state with significant ability to respond to near-term economic or fiscal conditions, such as federal budget reductions, in a manner consistent with the 'AAA' rating.
The 'AAA' rating on
Measured on a per capita basis,
Financial operations are conservative, with the state consistently demonstrating a strong commitment to budgetary balance through the downturn, including through repeated spending cuts, fund balance transfers and revenue increases. The state has also maintained flexibility in the form of its RDF, which remained funded at or near 5% of general fund revenues through the downturn. As of
The adopted budget for fiscal 2014 continued to maintain the state's fiscal flexibility in the form of a well-funded RDF, now forecast at
The revised fiscal 2014 plan released with the fiscal 2015 executive budget in January makes only modest changes to the fiscal 2014 budget and assumes the year ends with a general fund balance of
The fiscal 2015 executive budget proposal assumes that the general fund balance at
The burden of
The funding of pensions deteriorated over much of the last decade, with
Despite pensions being a comparative credit weakness, the state has taken multiple steps to reduce the burden of pensions. These include reducing benefit accruals, requiring higher state contributions in order to accelerate funded ratio improvement and shifting the normal cost of teacher pensions to local government. In 2015 the state will also begin phasing out a previous funding methodology that had resulted in annual pension contributions below an actuarially-calculated level over the last decade. Additionally, changes in 2011 to other post-employment benefits are estimated to have reduced the state's OPEB liability to
Additional information is available at 'www.fitchratings.com'.
In addition to the sources of information identified in the Tax-Supported Rating Criteria, this action was additionally informed by information from
--'Tax-Supported Rating Criteria', dated
--'U.S. State Government Tax-Supported Rating Criteria', dated
Tax-Supported Rating Criteria
U.S. State Government Tax-Supported Rating Criteria
Source: Fitch Ratings
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