Credit Rating Agency Warns State Officials That Rate Cut Could Be Coming If Pension Liabilities Not Corrected
Getting better or getting worse? That’s the question Mississippi leaders are debating after the third major credit rating agency warned last week that it was concerned about weakness in state finances and the overall economy.
For credit rater Standard & Poor’s Financial Services, the answer is “getting worse.” The agency didn’t downgrade Mississippi’s credit rating last week, but did change its outlook on the credit rating to negative. That’s a way of putting investors and the state on notice that a downgrade could be coming, if things keep going the way they are now.
“It’s not a downgrade…. It’s a warning,” is how Gov. Phil Bryant put it to reporters Thursday.
Actually, if you read the S&P report closely, the agency said it could have cut Mississippi’s credit rating from AA to AA-, citing increasing unfunded liability in the state pension system. But S&P chose not to, giving the state credit for good behavior in the past, citing Mississippi’s “historical focus on a balanced approach to proactive budget adjustments.”