Massachusetts’ $30.6 billion budget for fiscal 2012, which restored $65 million in local aid and improved the ability of governments to manage health-care costs, is a credit-positive for municipalities, Moody’s Investors Service said.
But the agency warned that “the $65 million is not a long-term fix since it’s funded by a one-time budget surplus that may not be repeated in future years.”
Moody’s praised the budget for providing potential savings in local governments’ health care costs, which it calls “a major driver of budgetary pressure.”
The Municipal Health Insurance Reform Act, passed as part of the budget, enables cities and towns to join the state’s Group Insurance Commission for health insurance. The Massachusetts Taxpayers Foundation said that could save local governments $330 million annually.
“This act is an important step in reducing health insurance costs for municipal employees, which have skyrocketed by 124% since 2002 and now account for roughly 13% of municipal budgets,” Moody’s said.
Massachusetts’ general obligation bonds are rated Aa1 by Moody’s, an equivalent AA-plus by Fitch Ratings, and AA by Standard & Poor’s.
