Tennessee Gov. Bill Haslam Tuesday said Tennessee will maintain a high rating from the nation's three bond-rating agencies, something he attributed to "Tennessee’s leadership and conservative fiscal management.”
The state will keep its Aaa rating from Moody’s Investor Service, its AAA rating from Fitch Inc. and its AA+ rating with a positive outlook from Standard & Poor’s. Moody’s, however, did place the state’s rating on “negative outlook,” following the agency’s decision in August to confirm the Aaa bond rating of the United States while assigning a negative outlook.
The ratings allow the state to pay lower interest rates when it borrows money. Tennessee has one of the lowest debt burdens of any state in the country, a fact that is a strong positive in the evaluation process.
“We have a proven history of fiscal responsibility in Tennessee, and I appreciate the confidence the agencies are showing in our current leadership team by maintaining the state’s strong ratings during these turbulent economic times nationally,” Haslam said in the release. “We are committed to fiscal restraint in managing our budget and will continue to prepare for the likelihood of less federal funding out of Washington.”
Finance and Administration Commissioner Mark Emkes, along with state constitutional officers including Comptroller Justin Wilson, Treasurer David Lillard and Secretary of State Tre Hargett, traveled to New York in August for preliminary presentations to two of the ratings agencies. Following the meetings, Emkes asked state agencies to draft contingency plans to prepare for reductions in federal funding.
Recently, Haslam and Emkes joined Lt. Gov. Ron Ramsey, R-Blountville, and the constitutional officers in New York for the state’s annual meetings with the three agencies. There they made the case that Tennessee is a well-managed state with low debt and is well positioned to weather the current financial climate, the release noted.
The Tennessee Constitution requires the state to balance its budget every year, and any capital project must be funded at 11 percent of its cost in the first year. Haslam emphasized such structural decisions in state government are important indicators of stability and prudent management.