The bonds are expected to sell via competitive bid on
In addition, Fitch affirms the 'AAA' rating on
The Rating Outlook is Stable.
General obligation, full faith and credit of the state of
KEY RATING DRIVERS
CONSERVATIVE APPROACH TO DEBT AND FINANCE: The state's conservative debt and fiscal policies have kept debt levels moderate and quickly amortizing, and have allowed for successful and timely action when addressing budgetary imbalances.
POSITIVE FINANCIAL RESULTS: The state has a history of taking action to close budgetary gaps and has prioritized building reserves.
STRONG LIABILITY POSITION:
SUCCESSFUL GROWTH MANAGEMENT: The state benefits from a growing and diversifying economy and has successfully managed associated operating and capital spending pressures, especially for education and transportation.
The rating is sensitive to fundamental change in the credit characteristics of the state, including a failure to respond to changes in the economy that result in budget gaps or an unexpected change in debt profile.
EXPANDING POPULATION AND ECONOMY
After several years of greater-than-average employment growth,
Service sector employment has led
RETURN TO REVENUE GROWTH
Major revenue sources have resumed growth. Overall, combined general and education fund revenues increased 9.7% in fiscal 2013, followed by an estimated drop-off of 1.5% in fiscal 2014 that can be attributed to shifts in personal income tax collections into the prior year due to federal law changes. Reflecting that income acceleration, as well as the rebound in employment, personal income tax, which is the main revenue source for the education fund, increased 16% in fiscal 2013, followed by a 3.1% decline in 2014. Sales tax revenues deposited in the general fund are demonstrating slow but steady growth despite earmarking of a portion of the growth in sales tax revenues for transportation purposes. The state generated a small operating surplus in fiscal 2013, some of which was used to bolster reserves.
The budget for fiscal 2014, which ended
CONSERVATIVE DEBT POSITION
The state's approach to debt issuance is conservative, relying primarily on GO bonds. The state does not issue variable rate debt, or issue short-term or cash-flow notes. Amortization is rapid as the state has historically limited its bond maturities to seven years other than for transportation related bonds for which it permits 15 year amortization.
Debt levels have begun to decline to former lower levels with limited debt issuance and rapid amortization, after having increased earlier in the decade. Debt continues to represent a moderate burden on resources with net tax-supported debt of approximately
Pension funding remains above average, although the funded ratio has declined in recent years, reflecting both the downturn in the market as well as a revision of the actuarial return assumption from 8% to 7.75% and subsequently to 7.5%. The state consistently funds the ARC. Using Fitch's more conservative 7% discount rate assumption, funding of the state's largest pension plan would decline slightly from 85.3% to an estimated 80%. The combined ratio of debt and unfunded pension liability is below average at 4.8% of personal income, compared to the 6.1% median for U.S. states, ranking
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', 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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