Washington state downgraded by Moody’s
More bad news for Washington state as Moody’s has downgraded the state’s rating outlook from “stable” to “negative.”
Moody’s Investors Service says compared to other states, Washington continues to struggle with a large shortfall. Lawmakers are in the middle of a legislative session trying to plug a $1.5 billion budget gap.
What’s so bleak in Washington state? “For now, the state’s construction industry continues to have a drag on the state’s recovery reflecting a housing donwturn that hit Washington later than most state and was worse than the state expected,” Moody’s says. Moody’s also cites the cyclical aerospace industry and remarks, “voter initiative activity adds element of fiscal uncertainty.”
In addition, Moody’s cites Washington’s dependence on sales tax and dings the state for depleting its financial reserves and using “significant one-time actions to blaance budgets.”
On the positive side, Moody’s does say Washington has strong demographic trends and “modest retiree health insurance liability.”
While Moody’s has downgraded the outlook, it has maintained the Aa1 rating for the state’s general obligation bonds—which affects how much it costs for the state to borrow money.
