The TRANs, which are dated
The TRANs are limited obligations of the state secured by a pledge of and lien on amounts held in the proceeds account, the payment account and sinking account of the note fund.
KEY RATING DRIVERS
AMPLE COVERAGE: Projected general revenue and borrowable resources provide ample coverage on each set-aside payment date.
SOUND PROTECTIONS: The note order provides for six set asides, transferred monthly beginning in
CONSERVATIVE OPERATIONS AND FORECASTING: State financial operations are generally conservative, and cash balances are growing even as cash flow borrowing needs have remained sizable. Assumptions for economic and revenue performance in fiscal year 2015 appear conservative.
STATE'S GENERAL CREDIT STANDING: Fitch rates the state's long-term general obligation (GO) bonds 'AAA' with a Stable Rating Outlook. This reflects its low debt burden, conservative financial operations and a growth-oriented economy that continues to outpace national averages. Longer term fiscal pressures stem from having to adequately fund the state's rapid growth, including for transportation, schools and water.
SUFFICIENCY OF COVERAGE: The rating is sensitive to the state's ability to maintain sufficient coverage for note repayment.
The 'F1+' rating on
The TRANs do not carry a GO pledge but are payable from deposits in the payment and sinking accounts of the note fund. TRANs are issued annually for cash purposes, with the
TRANs repayment is derived from transfers to the sinking and payment accounts from the GRF, with six scheduled payment dates. The final set-aside of
Borrowable resources include the
The state has customarily forecast cash flows conservatively. Excluding borrowable resources, the fiscal year 2015 GRF cash balance is forecast to begin at
The fiscal 2015 economic forecast assumes continued growth, albeit at a more measured pace compared to the state's rapid growth pace immediately following the 2008-2009 recession. Real GDP is expected to rise 3.4% in 2014 and 3.6% in 2015, below the 3.7% growth pace of 2013. Nonfarm employment gains are forecast to remain robust, at 3.3% in 2014 and 2.9% in 2015. Oil prices are forecast to drift lower, to
Projected fiscal 2015 expenditures are based on the fiscal 2014-2015 biennium adopted budget which included significant spending increases for schools, pay raises for state employees, and an increase in state contributions to pensions.
Fiscal 2014 actual performance through June was well ahead of forecast expectations. Revenues were 2.2% higher than forecast, driven largely by sales and oil production taxes. The
Additional information is available at 'www.fitchratings.com'
--'Tax-Supported Rating Criteria' (
--'U.S. State Government Tax-Supported Rating Criteria' (
--'Rating U.S. Public Finance Short-Term Debt' (
U.S. State Government Tax-Supported Rating Criteria
Rating U.S. Public Finance Short-Term Debt
Tax-Supported Rating Criteria
Source: Fitch Ratings
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