SAN FRANCISCO — Citing the recession’s impact on tax revenue, Moody’s Investors Service on New Year’s Eve revised its outlook to negative from stable on Washington’s Aa1 general obligation bond rating.
The action affects about $15 billion of outstanding GO bonds, as well as a new $488 million issue the state plans to sell competitively Jan. 13. Moody’s also revised the outlook to negative on about $806 million in Aa2-rated certificates of participation, as well as on a $132 million COP deal planned later in January.
“As a state with heavy dependence on sales tax receipts and no personal income tax, Washington’s revenues have been hit hard by the negative impact of the recession on consumer confidence,” Moody’s said in its ratings release.
The state is now facing a shortfall of about $2.6 billion for the remainder of its 2011 biennium, representing about 8% of projected general fund revenues, according to Moody’s.
“The negative outlook reflects Washington’s vulnerability to further downward revenue revisions given the uncertainty surrounding the timing and strength of the economic recovery; likely depletion of the rainy-day fund and significantly lower projected ending balances by the end of the biennium; and considerable out-year structural gaps due to substantial one-time solutions already incorporated in the enacted budget,” Moody’s said.
The state’s strong management tools and conservative budgetary controls are among factors that support the Aa1 rating, analysts added.
Fitch Ratings Wednesday affirmed its AA rating and stable outlook.
In its most recent review, in November, Standard & Poor’s affirmed its AA-plus rating and stable outlook.