A decision by Standard & Poor to put Alaska’s credit ratings on negative CreditWatch is concerning and disappointing, but comes as no surprise, says Alaska Gov. Bill Walker.
The governor was reacting on June 20 to an S&P report citing the lack of a budget for fiscal year 2018, continued reliance on savings to pay for government services, and a lack of new revenues as reasons for the negative outlook.
S&P’s decision means Alaska’s AA+ general obligation bond rating is in danger of being lowered yet again if a complete fiscal plan is not adopted this year. S&P also placed Alaska’s AA appropriation rating and A+ moral obligation rating on negative CreditWatch.
“The agency’s analysts note that we are continuing to drain our savings at a alarming rate, and have not yet enacted a fiscal plan,” Walker said. “It is critical that we pass an operating budget for next year, and adopt a fiscal plan that does not continue our over-reliance on savings.” The governor said he remained hopeful that legislators would pass a budget and complete fiscal plan to secure the state’s future “and demonstrate that Alaskans take their finances and budget issues very seriously.”
Speaker of the House Rep. Bryce Edgmon, D-Dillingham, said S&P’s action “shows the need for lawmakers to move beyond short-term fixes and embrace long-term fiscal solutions, which is exactly what the members of the Alaska House Majority Coalition have been fighting for since the start of the legislative session.”
Edgmon said new and more diversified revenues are needed for Alaska. “If we continue to kick the can down the road, not only will our credit ratings and borrowing costs suffer, so will our broader economy and Alaska jobs,” he said.
The negative CreditWatch indicates that S&P is concerned about Alaska’s fiscal stability, and if ratings are lowered, it could cost the state millions of dollars in additional interest payments, Walker said.
Just days ago Walker called the 30th Legislature into its second special session to focus initially on passing an operating budget, allowing government services to continue past July 1.
