PHOENIX – Alaska's ratings have been affirmed and the state is no longer on S&P Global Ratings' CreditWatch, where it had been placed on review for possible downgrade since June 9.
S&P Monday affirmed the state's general obligation rating at AA-plus, its appropriation rating at AA, and its moral obligation bonds at A-plus, all with a negative outlook. The oil revenue-dependent state has suffered with prices of the black gold at extremely low levels, and sweeping fiscal reforms sought by Gov. Bill Walker failed to gain traction with the legislature when it passed its budget in June. Triple-A rated by all three major agencies when 2016 began, Alaska saw downgrades from all three this year.
"The removal of the ratings from CreditWatch reflects our view that although the legislature did not approve fiscal reforms sought by the governor to address the state's structural budget deficit, his nearly $1.3 billion in vetoes put the state on track to have similar fiscal results as if it had," said S&P analyst Gabriel Petek. "The outlook is negative, however, reflecting that while the vetoes buy the state additional time, they do not represent a solution to the state's structural deficit."
Walker is continuing his push for new taxes and other reforms to get Alaska back on a sustainable footing, warning last month that without further action the state's budget reserve will be completely depleted in fiscal year 2018.
