Credit agencies keep Louisiana's AA rating, but drops credit outlook

Credit agencies keep Louisiana's AA rating, but drops credit outlook

BATON ROUGE, LA (WAFB) - Three major U.S. credit agencies have decided to keep Louisiana's credit rating at an AA.

Commissioner of Administration Kristy Nichols feels like the affirmation by the agencies means good news for the state. "We made it clear to each agency that we were focusing on creating sustainable reductions in the upcoming budget," says Nichols. She notes that the goal is to reform the way Louisiana's tax credit system works in order to lessen the impact on higher education and healthcare.

While all three agencies kept Louisiana's AA rating steady, credit agencies Standard and Poor and Moody's Investors Services changed the state credit outlook from "stable" to "negative", which could leave Louisiana vulnerable to a credit reduction in the future.

"Like a kid behaving badly, we've been placed on probation," says Louisiana Treasurer John Kennedy, "This should be a wakeup call that we need to stop spending more than we take in."

Moody's reasoning for dropping their outlook focuses on a $1.6 billion deficit, below average job growth, gaps in the budget, along with issues with Medicaid.

Treasurer Kennedy says that he is not taking Moody's report lightly. "This is not rocket science; it's fiscal conservativism. We need to get to work before our taxpayers pay for the administration's mistakes with higher interest rates."

Higher credit ratings allow Louisiana to pay back debts with a lower interest rate, saving the state money. Standard and Poor defines an AA credit rating as a "Very strong capacity to meet financial commitments."

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