Gov. Edwards releases statement on Louisiana's credit rating

(WAFB) - Louisiana Governor John Bel Edwards released a statement Wednesday on Louisiana's credit rating. Moody's Investor Services did not change the state's credit rating, but did issue a negative outlook. S&P Global Ratings lowered its long-term rating to AA- from AA.

The governor's statement can be read below:

The credit rating agencies are echoing what I, and many in the legislature, have said for a long time – structural tax and budget reform is critically important for our state's future. Much of the state's negative outlook is due to the fact the state will lose a significant amount of revenue in fiscal year 2019. There is a responsible way that we can reform our tax structure to make it fair and predictable for businesses and also bring in sufficient revenue to support the state services a vast majority of state legislators believes is important to maintain for their constituents. We have to get this work done, and I am committed to working with members of the legislature – Republicans and Democrats – to enact meaningful changes to our state that will, undoubtedly, help us in the future.

The downgrade in the state's credit rating is similar to that of an individual person's rating, meaning the state will pay a higher interest rate when borrowing money until the ratings improve.

S&P Global Ratings cited the "state's persistently weak revenue collections stemming from prolonged contraction in the oil and gas industry coupled with weak income tax collections (both individual and corporate)."

The full notice from S&P can be read here.

Moody's Investor Services issued a negative outlook for the state, citing the fiscal "cliff." They justify the negative outlook with the following reasons:

  • Fiscal cliff looming in 2018 as tax increases roll off
  • Uncertain revenue forecasts
  • Implementation challenges and legislative reluctance to enact significant changes to the state's revenue structure

The full notice from Moody's can be read here.

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