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Moody’s Improves Outlook, Affirms Maine Bond Rating
June 5, 2014
For Immediate Release: June 5, 2014
Contact: Adrienne Bennett, Press Secretary, (207) 287-2531
AUGUSTA – Moody’s Investors Service, a leading provider of global credit benchmarks, announced today that they have affirmed their credit rating on the State of Maine’s general obligation debt. Moody’s affirmed their ‘Aa2’ rating while improving their outlook on Maine’s debt from negative to stable.
According to Moody’s, “The stable outlook reflects our expectation of revenue stability going forward and the state’s adequate flexibility to manage spending pressures.”
“If there is one lesson to take away from the Moody’s rating, it is that Republican reforms are working for Maine,” said Governor Paul R. LePage. “It was Republican efforts to repay our hospitals, reform the public pension system, and maintain the balance of the budget stabilization fund that led Moody’s to improve their outlook for our state.”
In addition to Maine’s “significant” public pension reforms, Moody’s cited our conservative debt structure, below-average unemployment, and above-average labor force participation as strengths that contributed to their improved outlook. The pension reforms, which were proposed by Governor LePage during the 125th Legislature, reduced the state’s unfunded public pension liability from $4.1 billion to $2.4 billion, a decrease of 41 percent.
Reflecting on the challenges faced in Maine, Moody’s pointed to budgetary uncertainty due in part to unanticipated MaineCare costs. According to Moody’s, “Escalating healthcare costs have been a long term challenge for Maine.” They also noted that Maine’s high pension liabilities will put pressure on future budgets.
“If liberals in the Maine Legislature had their way, they would have successfully raided the budget stabilization fund; expanded an already bloated Medicaid system to able-bodied, childless adults; and rolled back the very pension reforms that are continually praised by rating agencies,” continued Governor LePage. “Maine Democrats are more interested in expanding welfare and playing politics with the state’s finances than governing. Actions speak louder than words, and I am glad that I could stand with Republican legislators against these budget-busting proposals and protect Maine’s bond rating.”
The improved outlook from Moody’s follows a series of recent downgrades in states such as Kansas and New Jersey.
“In light of recent downgrades in other states, it’s encouraging to see that the rating outlook for Maine has improved,” said Department of Administrative and Financial Services Acting Commissioner Richard Rosen. “In addition to paying the hospital debt, our conservative revenue forecasting model has helped the State avoid severe budget shortfalls that others have experienced. We are well positioned to go to the bond market and seek the best rate possible for Maine taxpayers.”
The State of Maine intends to conduct its bond sale on June 12, 2014. These bonds include projects to support the Maine Maritime Academy, National Guard armories and the Department of Transportation. It is estimated that projects funded through the sale of bonds will put as many as 25,000 Mainers to work.