|Tennessee to make case for keeping top debt rating
|Posted: Tuesday, August 9, 2011 9:06 pm
|By ERIK SCHELZIG
NASHVILLE (AP) — Tennessee officials are headed to New York this week to make their case for why the state should keep what finance commissioner Mark Emkes calls its “prestigious” debt ratings, even after one of the three major agencies downgraded the federal government’s grade.
Emkes told The Asso-ciated Press Monday that officials plan to meet this week with officials at Moody’s and Fitch. The state’s full presentation for all three credit ratings agencies is still scheduled for September.
“We don’t want them making a decision until we show them all the good things that have happened and are currently going on in Tennessee,” Emkes said.
“We don’t want to take the chance for them to say, ‘Well, since you’re not coming up until September, we’re going to go ahead and take action,”’ he said.
Emkes said about 40 percent of Tennessee’s budget comes from federal sources, but that the executive and legislative branches have shown the ability to make necessary cuts. Lawmakers unanimously approved this year’s spending plan — which included cuts to every agency and the state’s expanded Medicaid program.
“Part of the concern of ratings agencies is: Do the states have the political will and the discipline to balance their budgets even if revenues are down and there’s less money to be received by the federal government?” Emkes said. “We’ve proven time and time again that we do have the will to do that.”
Emkes said even in the event of a downgrade, Tennessee would not see a major problem because the state has a low debt burden.
“As far a pure financial impact, it would be minimal because it would be a few basis points and it would be from here going forward,” he said. “It would not have a major impact to our finances. However, it’s a prestigious thing, and we would like to hang on to it if at all possible.”
Tennessee was one of nine states with a top credit rating until 2000, when Standard and Poor’s first dropped the rating amid the failed effort to impose a state income tax. The agency cited the state’s “weak budget practices” and patchwork spending plan.
The state’s credit ratings took several more hits until they were built back up in former Gov. Phil Bredesen’s administration. Bredesen left office in January and was succeeded by Republican Gov. Bill Haslam.
Published in The Messenger 8.9.11