Standard and Poor’s Financial Services, known as the S&P, has downgraded the credit outlook for the state government.
No official debt cut ratings have been made, but there did come a stern warning: tight budgets will only continue to get worse while tax cuts eat into what could be state revenue.
Another mark against the state the unfunded liability of the Public Employees Retirement System– which could mean state and local governments ponying up to pay the gap.
The S&P report cited a number of factors in reaching this decision to reduce Mississippi’s credit rating, including:
- Weakness in revenue trends
- Weakness in several national indicators, such as economic growth, population growth, educational attainment, unemployment, and industry diversity
- An already stressed budget
- High debt burden
- Low and declining funded ratio for the Mississippi Public Employees Retirement System (PERS)
A copy of the full report is attached here.
State Treasurer Lynn Fitch said this downgrade has been coming.
“This downgrade should come as no surprise. In fact, we’re fortunate it wasn’t worse. Mississippi is making progress with our unemployment rate dropping and our positive economic growth, but we are still lagging behind most of the nation. And, with our population growth stagnant, it’s only common sense that investors would have concerns,” said Fitch.
“That makes it all the more important that the Mississippi Legislature implement very prudent and very responsible fiscal policies when it comes to spending, taxing, and borrowing. Standard and Poors put Mississippi on notice with this report,” Fitch said. “We have a likelihood of one in three of downgrade in the next two years, so we have time to turn things around before more serious consequences for taxpayers.
The treasurer said hopefully, something can be done.
“As Treasurer, I will do my part to encourage the Legislature to head down a more fiscally conservative path. And, as a Trustee of the PERS Board, I will do whatever I can to ensure that S&P never again says that we are lagging in or responsiveness to a declining funded ratio,” said Fitch.