Wednesday, November 6, 2013

Mississippi's Bond Rating Downgraded to "Negative"

Last night, Geoff Pender at the Clarion Ledger reported that Mississippi's bond rating has been downgraded from "stable" to "negative." 

You don't have to know much about economics to understand that a "negative" rating for Mississippi is not good for the state, yet just two years into complete Republican control of Mississippi's government, here we are.

And this is just a warning. According to Pender, Fitch Ratings (no relation to State Treasurer Lynn Fitch), things could be worse, and quickly if we don't turn ourselves around:

While the agency did not drop the state’s credit rating from AA+, it warned, “The rating may be lowered if the state is unable to consistently fund ongoing operations without relying on one-time revenue sources, if there is weakness in the economy that diverges from the national trend, or if funding for pension liabilities weakens.” A drop in credit rating would cost the state millions in interest rates for general obligation bonds, and can be a turnoff for major economic development projects.

Fitch cites "volatile" industries,  "above average liabilities," and the usual suspects of high poverty/low employment as the chief concern causing the downgrade.

Perhaps the most telling statements come from the Republican leadership's own mouths. When asked about the rating, Lieutenant Governor Reeves said, "...there has not been the political will to do anything about it. I don’t know if that is changing or not..."

On the State Legislative side, Speaker Gunn had a similar pitch to Pender:
“We cannot declare (the recession) is over. We may have seen the bottom and stopped going down, but it’s gradual growth. One economist I heard said it could be 2018 before we see substantial improvement.”
This might be a good time to remind you of MSGOP chairman Joe Nosef's August 28th interview with the Clarion Ledger:
Unlike the nation here in Mississippi the economy is strong. Mississippi's economy totaled more than $100 billion for the first time. Since taking office, Phil has announced the creation of 7,298 new jobs and more than $1.1 billion in private sector investment to date. Have announced 4,659 of those jobs in 2013. 2012: 2,674 new jobs (plus 400 retained jobs), $455,560,000 in company investment. White taxes and regulations are going up in Washington, the Governor has taken both of those in opposite direction. Obviously though there is much more to do and progress to make. I think he thinks about that all the time and I talked to him this morning about some projects he is excited about.

So who owns this problem?

1 comment:

Kingfish said...

Oh, I don't know. The Fitch report repeatedly stated the problems with PERS as one of the main reasons for the change to negative.

And this website has steadfastly and vocally opposed any changes to PERS as well as any scrutiny of PERS.

And the bond rating was not downgraded. The outlook was. Yes, there is a difference, a fine one, but still a difference. Don't feel too bad, I made the same mistake.