Gov. Bill Haslam and Lt. Gov. Ron Ramsey wrapped up discussions with Wall Street bond agencies Wednesday and reported positive responses to Tennessee’s bid to keep its top-notch credit rating.
After meeting with Fitch, Moody’s Investors Service and Standard & Poor’s agencies in New York, Haslam said, “I would characterize all three of the discussions as very positive.”
Ramsey said, “The evidence we presented was truly overwhelming.
“We believe that Tennessee is clearly a AAA state, and we told the folks at Fitch’s, Standard & Poor’s and Moody’s just that,” he added.
Tennessee holds a AAA rating from Moody’s and Fitch and a AA+ rating from Standard & Poor’s. But during this summer’s debt ceiling negotiations in Washington, Moody’s told Tennessee and four other states that they face downgrades because of their dependence on federal revenue. Moody’s later reaffirmed triple-A ratings for Tennessee and the four other states, but the agency also gave all of those states “negative” outlooks because of the federal budget volatility.
In response, Haslam directed each state department to outline how they would respond to federal funding cuts of up to 30 percent. Under the worst-case scenario, more than 5,000 state workers would lose their jobs.
In a conference call with reporters, Haslam said the bond agencies were impressed by the state’s planning for spending cuts. He said officials also pointed out that the federal government accounts for 17 percent of the state’s economy, “right at national average.” Ramsey didn’t participate in the conference call but communicated his thoughts on the meetings in a note on his Facebook page.
“Not only did we boast of our low taxes and our pro-business climate, we made clear our state government’s fiscal house is in order,” he wrote. “If this recession continues or if the federal government ends up pulling the rug out from underneath us, we will have the structure in place to withstand the hit —far better and for far longer than many other states.”
Ramsey noted that the legislature restored $70 million to its emergency “rainy day” fund in the current state budget and state debt is low.
“Put simply,” he said, “we have very little debt and what debt we do carry we pay off quickly.”
The governor and state finance officials go to New York every September to explain the state’s finances to the agencies. Haslam said officials don’t expect to learn whether the state will keep its credit rating until next month. If Tennessee’s rating is downgraded, borrowing costs would go up.
State Democratic Party communications director Brandon Puttrese said the state’s fiscal picture would look better if Republicans would do more to create jobs.
“This dog and pony show looks obnoxious to the 300,000 unemployed Tennesseans who are struggling to find work and provide for their families.
“The quickest way to strengthen our state's fiscal house is to put those 300,000 Tennesseans back to work. If Ron Ramsey put half the effort he expends writing Facebook updates into a common sense jobs plan, Tennessee would get there a lot faster.
“I'd like to see a day where the numbers we brag about are Tennessee's slow unemployment rate and high economic output.”