Connecticut has had the outlook on its bond rating cut by a key agency. Governor Rell has described the news as an alarm signal. WNPR’s Harriet Jones reports.
Moody’s Investors Service has issued a report in which it revises its outlook on Connecticut’s General Obligation bonds from stable to negative. Moody’s cited concerns about the state’s new two year budget, which it says relies excessively on deficit financing and one-off sources of revenue. It also says Connecticut’s credit profile includes significant long-term liabilities. Moody’s issued similar reports for at least eight other states.
The report does not affect the standing of Connecticut’s existing bonds, but if it did lead to an actual ratings downgrade it could make it more expensive for the state to repay bonds.
Governor Rell, who refused to sign the budget, has sent the report to legislators, calling for more reductions in state spending. Connecticut’s Treasurer, Denise Nappier says she’s disappointed by Moody’s action, saying the agency has reinforced what the state already knows it must do – strengthen it’s fiscal footing going forward. But Nappier does say she believes Connecticut is in a better position than most states to be able to readjust its fiscal policies.