The bonds are scheduled to sell via competitive bid on
Fitch Ratings also affirms the 'AA+' rating on
The Rating Outlook is Stable.
GO bonds: General obligation, full faith and credit of the state of
BRFA bonds: Special obligation of the
KEY RATING DRIVERS
SLOW GROWTH AND DIVERSIFICATION: The trend in
MODERATE DEBT POSITION: Debt levels are moderate with most debt issued by a variety of authorities. However, pension funding has weakened in recent years.
SPENDING CONTROLS: Strong spending controls include a statutory requirement to make across-the-board appropriation reductions to maintain budgetary balance. Recent financial performance has been stable.
SIGNIFICANT TRUST FUND BALANCE: The state benefits from the maintenance of sizeable reserves in the
The rating is sensitive to material deviation from historically prudent financial practices, a change in policy or statute regarding use of the
The rating reflects the state's longer term trend toward a more diversified economy even with continued reliance on manufacturing, strong spending controls which contribute to balanced operations, and manageable debt levels.
MANUFACTURING BASED ECONOMY
Wealth indicators have typically been well below national averages, but show improvement in recent years. Personal income per capita is just 82% of the U.S. average, ranking it 42nd among the states. Quarterly personal income returned to growth in the first quarter of 2010 at a pace higher than that of the US or southeast region. More recently, personal income, while still growing, has lagged the growth of the US and southeast region. The poverty level is still among the highest of the states.
BUDGET BALANCE THROUGH SPENDING REDUCTIONS
State financial operations are dispersed among a variety of funds, supported by a diverse revenue stream. General fund operations are relatively small, limited to general government functions, health, and police/corrections, and supported by a variety of taxes and fees, including a portion of the sales and use tax and earnings on the
Financial operations benefit from strong spending controls, with a constitutional requirement to make across-the-board appropriation reductions, called "proration," when a deficit is projected in one of several funds; debt service is not subject to proration. This device has been implemented several times, especially in the education trust fund, but also in the general fund. The state depleted cash balances in the general and education funds, utilized rainy day fund borrowing from the
Financial operations have improved after several years of recession related revenue declines that required multiple rounds of budget reductions. With fiscal 2014 general fund revenues largely on target, the state will be able to make a sizeable repayment of the ETF rainy day fund draw at the end of the fiscal year as anticipated. The adopted budget for fiscal 2015, which begins
SIZEABLE RESERVES SUPPORT OPERATIONS
The state maintains a sizeable balance in the
LOW DEBT BUT WEAK PENSION FUNDING
With a constitutional prohibition against issuing debt, except by a constitutional amendment, state debt issuance is diffuse, issued by a variety of authorities, with less than 20% of debt general obligation. Debt levels are moderate at 2.2% of 2013 personal income. However, a longer term concern is the deterioration in pension funding levels: the two largest systems, covering general employees and public education, were over-funded as recently as 2001 but are now funded on a reported basis at 65.8% and 66.5% respectively as of
Additional information is available at 'www.fitchratings.com'.
In addition to the sources of information identified in the report 'Tax-Supported Rating Criteria', this action was additionally informed by information from
--'Tax-Supported Rating Criteria'(
--'U.S. State Government Tax-Supported Rating Criteria'(
Tax-Supported Rating Criteria
U.S. State Government Tax-Supported Rating Criteria
Source: Fitch Ratings
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