The money spent to clean up the oil released into the Gulf of Mexico will help ease the financial impact caused by the spill itself, asserts a new report from Moody’s Investor Service.
Kristen Button, a vice president in Moody’s Dallas office, said the public finance group is monitoring the ratings of state and local governments in Louisiana, Mississippi, Alabama, and Florida, but so far has not found any negative credit aspects.
“The near-term financial risk for state and local governments is the decline in economically sensitive income, especially sales and hotel taxes as a result of disruptions in tourism, fishing, and oil drilling sectors,” Button said. “So far, the cleanup is bolstering the local economies.”
She said lost fishing-industry revenue is being offset by the participation of fishing vessels and workers in the cleanup, while lost tourism revenue is being offset by money spent in area hotels by response teams and members of the media.
Longer-term effects could emerge if the oil industry damage is greater than anticipated.
Button said any additional information will be analyzed for “financial and economic changes that could challenge governments or their ability to sustain operations and to meet debt-service requirements.”
The ratings assigned to the states by Moody’s are Aa2 for Louisiana and Mississippi and Aa1 for Alabama and Florida. The credit outlook is stable for the four states.
