Moody's Cuts Hawaii's Bond Rating A Notch On Finances, Economy
DOW JONES NEWSWIRES
Moody's Investors Service on Tuesday downgraded its bond rating on Hawaii, saying the state's sustained recession and one-time budget fixes are straining the government's finances.
Moody's rates Hawaii's general obligation bonds at Aa2, the third-highest credit rating. Its outlook is stable.
State revenue has been threatened for years by the overall economy, which suffered acutely during the recession after tourism slumped. Despite recent signs of improvement in that vital industry, the state warned in a special March forecast that natural disasters in Japan, higher oil prices and the state's decision to delay paying fiscal 2010 tax refunds until fiscal 2011 would further pressure the economy.
Moody's justified the downgrade based on the state's forecast depletion of reserve funds by the end of the 2011 fiscal year, sustained budget shortfalls relieved by one-time solutions and low pension-funded ratios relative to other states. Hawaii's audited financial results have also come in late since fiscal 2007, a trend the ratings agency said contrasts with the state's other good-governance policies.
Democrat One-Party Rule Responsible for Moody's Downgrade: Abercrombie's 'New Day' results in a very bad day for Hawaii
The Hawaii Republican Party reacted to today's decision by the leading credit agency Moody's to downgrade the State of Hawaii's general obligation bonds.
"Today's decision by Moody's is the result of one-party rule and continued reckless fiscal behavior by Hawaii's Democrats. The Abercrombie administration has shown a near total lack of leadership in guiding our state and the Democrat controlled legislature is equally complicit in the financial mismanagement of our government. Although many of the economic challenges outlined in this report began during the previous administration, Governor Lingle's responsible fiscal management preserved Hawaii's Aa1 bond rating," said Jonah Kaauwai, Hawaii GOP Chair. "Hawaii deserves better. Today's downgrade of our state's bonds by Moody's is yet another clear indication as to why we must change our political leadership in the 2012 elections."
The decision by Moody's will likely result in higher interest rates and borrowing costs for Hawaii. This will further exacerbate the fiscal problems Hawaii is already in.
The Bond Buyer: Hawaii Cut to Aa2 by Moody’s
PRECISELY AS PREDICTED: