The par amount of the second series C refunding bonds is subject to change.
The negotiated sale of the second series A bonds will take place beginning on
In addition, Fitch affirms the ratings on the following obligations of the state:
The Rating Outlook is Stable.
The bonds are 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. The state took repeated action during the course of the last 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 to improve funding levels.
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 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
The state's approach to fiscal management has been consistently conservative both through the last recession and during the recovery, with the state relying on spending cuts, revenue increases and the use of non-recurring resources to maintain balance.
WEALTHY, DIVERSE ECONOMY
Job gains in May were spread across multiple sectors, including in construction and professional and business services, although federal government employment continued a decline that began almost two years ago. The state's unemployment rate, at 5.6% in
CONSERVATIVE FINANCIAL OPERATIONS
Financial operations are conservatively maintained, with the state consistently demonstrating a strong commitment to budgetary balance through the downturn and the slow recovery that has followed. The state has maintained flexibility in the form of its rainy day fund (RDF), which remained funded at or near 5% of general fund revenues through the downturn, as well as its practice of responding quickly to changing budgetary circumstances through repeated spending cuts, fund balance transfers and revenue increases.
The fiscal 2015 adopted budget assumes a general fund balance at
STRONG DEBT MANAGEMENT
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 their burden and improve sustainability over time. These include lowering benefit accruals, requiring higher state contributions 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 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
Tax-Supported Rating Criteria
U.S. State Government Tax-Supported Rating Criteria
Source: Fitch Ratings
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