Fitch: U.S. States to Ride Out Budgeting Obstacles in 2016
Ratings on all U.S. states will carry a Stable Outlook into next year
for the first time since the downturn, though the sector will not be
without its ongoing challenges, according to Fitch Ratings in its 2016
With stable credit trends, the most significant driver of rating changes
next year will be Fitch's revised tax-supported rating criteria. Final
methodology will be in place in early 2016, with minimal changes
expected for state ratings. 'Only an economic cycle of unusual depth or
duration would result in a higher level of rating transition for U.S.
states,' said Managing Director Laura Porter.
That said, budget negotiations in some states became increasingly
contentious in 2015. 'Budget managers face ongoing demands for
additional spending on one side and tax relief on the other, and the
pace of revenue growth is insufficient to satisfy all,' said Porter.
Soft crude oil and natural gas prices will also continue to weigh on
energy states, with revenues to remain weak well into next year.
Medicaid also remains a key focus.
Discussions around the Affordable Care Act will shift from increased
enrollment towards absorbing the new expenses that expansion states are
scheduled to take on from the federal government in the next fiscal
year. Another pressure point for state ratings in 2016 revolves around
transportation. States will increasingly turn towards the public private
partnership (P3) model for larger, more complex projects. Pension
contributions will also continue to rise next year due to past
investment losses and contribution practices, use of more conservative
assumptions and demographic trends.
'2016 Outlook: U.S. States' is available at 'www.fitchratings.com'
or by clicking on the above link.
Additional information is available on www.fitchratings.com.
2016 Outlook: U.S. States (Credit Stability but Budgeting Remains a
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AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'.
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SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS
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CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH
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Copyright Business Wire 2015
Source: Business Wire
(December 1, 2015 - 10:36 AM EST)
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