Massachusetts House of Representatives Credit Rating Task Force report

24 Pages·2003·0.75 MB·English

by  Massachusetts. General Court. House of Representatives. Credit Rating Task Force

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POSitory Copy
Massachusetts House of Representatives
Credit RatJ/aadieek Perce Report

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Credit Rating Task Force
Match Revenues Create
against Expenses
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Show a realistic, Tobacco Bonds value
evidence-backed plan dubious long term
is
Avoid Gimmicks Save now for next
Avoid One-shot Deals rainy day
Deficit Financing: Evaluate details and
Risky and Expensive exit strategy for any
new
borrowing

:
"courage, integrity, judgment and dedication- the
qualities... sent to this chamber (to prevail against) The Credit Rating Task Force
...the stormy years that lie ahead."
On behalf of Representative Parente,
Representative Wagner, and all the honorable
|OHNr KENNCm STOMFROMTHISROS1 members of our respective committees we thank
TOTHEMASSACHUSETTSCENTRALCOURTUNIANUARYVMi you for your attention and support,
Rep. James H. Fagan, chairman
HousePostAudit andOversightCommittee
..
wht- A, SiGali Rep. JosephWWagner, chairman
CommitteeonTransportation
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kl'SNECn >S:Sr^£v;rtNTCrTHCl*MTIO^TfTfN Rep. ManeJ. Parente, chairman
HouseCommitteeonLongTerm Debt
CRTF Seminar participants Members of the CRTF
Treasurer of the Commonwealth
Executive Office of Administration and House Committee on Post Audit and
Finance
Oversight
Comptroller of the Commonwealth
Fitch Ratings
House Committee on Transportation
Standard and Poor's Corp.
MassPort, MBTA, MassPike;
Federal Reserve Bank of Boston; House Committee on Long Term
Several Investment banks Debt
Massachusetts Taxpayers Foundation

Misery versus Happiness Massachusetts House of Representatives
Don't spend more than you earn Doing Its Job
^Bm
'.''>"£'!':" >-"•-'".';• "CoMpypeort-fhieerlda.d"viscaei,d Mr. "No one is watching their credit rating
Micawber, you know. better than'the Massachusetts House of
Annual income twenty
pounds, annual Representatives, certainly (the leader) in
expenditure nineteen,
nineteen six, result the Northeast." - nationalcredit rating agency
happiness
.
"Annual income twenty
pounds, annual
expenditure twenty
pounds, ought and six,
result misery
...in short, you are for
everfloored. As I am!"
Good Management
Put on my
Important Ratings Assessments it bill
Some states take actions and hope A duck walks into a
bar and orders a
that things get better; this is not a
drink.
good strategy.
The bartender says
Rating agencies assess a state's fine, but how are you
management by credible evidence: going to pay for this
drink?
What is the strategy/plan? The duck says:
Will it work? Put it on my bill!
What and where is the proof?
Massachusetts:
Wealthy state but deeply indebted
First "snap shot" for credit rating
agencies is gross personal income
and its relation to overall state debt
Massachusetts income to debt ratio
9 percent
is
Rating agencies danger zone
10 percent income/debt
is
ratio

% Fitch Ratings
Formula for 9
of New England States
Fitch Ratings assess a state's debt Connecticut AA
position by dividing the total state
Maine AA+
debt (Mass. = $22.7 billion) by the
gross personal income (Mass. =
Massachusetts AA-
$248.2 billion) to achieve a ratio.
New Hampshire AA+
Mass. debt to income ratio Rhode Island AA
9.1 percent I
is Vermont AA+
Credit Rating Agencies: S&P Ratings
The Umpire Strikes Back for New England States
Downgrades follow Connecticut AA
bad judgments
Maine AA+
Credit Rating
Massachusetts AA-
Agencies sort out
the structurally New Hampshire AA+
balanced plans
from schemes,
Rhode Island AA-
gimmicks, and
one-shot deals. Vermont AA+
The Rating Agencies Moody's New England
View of Massachusetts "G-O" Debt state debt ratings
Fitch Conn. = Aa2 negative outlook and
Ratings AA- Negative negative watch list
outlook Maine = Aa2 stable outlook
Standard and Mass. = Aa2 negative outlook
Poor's (S&P) AA- Stable . N.H. = Aa2 stable outlook
Outlook
m R.I. = Aa3 stable outlook
Moody's
Investor Aa2 Negative . VT = Aal stable
Service outlook KjOngap«fMoody*!IniUcrSr*ce