Fitch Ratings affirms the following ratings for the --The state's implied general obligation (GO) rating at 'AAA';
In a release on
The 'AAA' rating reflects the general credit quality of the state, as
Key Rating Drivers
Conservative Fiscal Management: The state has a careful and conservative approach to financial operations and has consistently achieved budgetary balance and maintained sizable reserves.
Low Debt and Liability Levels: The state's debt burden is very low, primarily reflecting the state's pay-go funding of capital projects and continued satisfactory funding of pension liabilities.
Sound Coverage on Special Obligation Bonds: Gaming revenues continue to provide satisfactory coverage of required appropriations for debt service on this obligation.
Reserve Fund Replenishment: A reserve fund deficiency make-up commitment by the state enhances the security provided on the Vision Iowa fund bonds, resulting in a rating two notches below the state's 'AAA' implied GO rating.
The implied GO rating is sensitive to the state's continued financial stability, stable economy, and very manageable debt position. The Vision Iowa bond rating is sensitive to changes in
The state's implied 'AAA' GO rating and Stable Outlook reflect its stable economy, conservatively managed financial operations, and low debt and liability burden. The Vision Iowa bonds benefit from a reserve fund holding an amount equal to maximum annual debt service. Providing additional security and serving as the basis for the 'AA' ratings on the bonds, if the reserve is drawn upon, the state treasurer certifies the deficiency to the governor and the governor shall include a request in the succeeding year's budget for an appropriation for the amount. The state is required to certify the sufficiency of funds in the accounts each
Stable Economy with an Important Agricultural Sector
Farm income remains more important to
Conservatively Managed Financial Operations
Fitch considers the state's finances to be conservatively managed and sizable reserves are maintained.
Strong financial results in fiscal 2013 fueled both by abundant corn and soybean production that increased personal incomes and the push forward of personal income into calendar year 2012 due to uncertainty over federal tax legislation, resulted in a 12.4 percent increase in personal income tax (PIT) receipts and overall 7 percent growth in revenue from fiscal 2012. The balance in the CRF achieved its funding goal at
The fiscal 2014
The state's revenue estimating conference (REC) forecasts fiscal 2015 tax receipts to be up 5.4 percent from fiscal 2014 based on receipts through
Very Manageable Debt and Liability Position
The state's debt management is very conservative and outstanding debt obligations are modest. Total tax-supported debt of
The Vision Iowa bonds are payable from a standing appropriation of gaming revenues, and, if necessary, lottery revenues. In the 2013 legislative session, the state modified the standing allocations from gaming revenues, with required allocations that occur up to the Vision Iowa allocation reduced from
Gaming revenues are primarily derived from a number of racetrack and riverboat casinos located in 14 counties. Riverboat gaming has been allowed since 1989 and games at racetracks since 1994. Revenues grew steadily, reaching
The sound coverage on the bond issue is partially offset by the uncertainty presented by discretionary activities, the unsteady revenue trend, the state's ability to reallocate pledged revenues, and the need for interest income to support the Vision Iowa bonds' debt service requirements. Positively, the requirement that referenda be held every eight years in each county to re-authorize casino gaming was modified by the 2011 legislative session, and re- authorization referenda is now only required for new casino gaming operations; the existing facilities are exempt. Also positively, lottery revenues have remained a growing source of additional security should they need to be called upon.
Additional information is available at fitchratings.com.
In addition to the sources of information identified in Fitch's 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
--'Rating Guidelines for Moral Obligations', dated
Tax-Supported Rating Criteria
U.S. State Government Tax-Supported Rating Criteria
Rating Guidelines for Moral Obligations
((Comments on this story may be sent to firstname.lastname@example.org))
Fitch Ratings affirms the following ratings for the
--The state's implied general obligation (GO) rating at 'AAA';