South Carolina avoids credit downgrade, faces review
Fri, 05 Aug 2011 15:17:00 GMT —
COLUMBIA (WACH) " Moody's Investor Service is continuing South Carolina's AAA credit rating, but has added a negative outlook similar to that given to the federal government. South Carolina's AAA rating was initially at risk of being downgraded if the debt limit was not raised by Congress because of the state's reliance on Medicaid.
A credit rating of AAA means it costs less to borrow money for things taxpayers depend on like schools, roads and bridges.
South Carolina has AAA credit for a reason, Treasurer Curtis Loftis said. We live within our means and are constantly guided by sound financial principles. The negative outlook for the federal government has spilled over to the states and is a wake-up call that government must not spend more than it has."
Moody's officials were in Columbia last month as Governor Nikki Haley held a financial summit on the state's finances and economic outlook.Related Stories Credit rating service in capital city to talk SC financial status Possible debt debate impact in SC Moody's eyes possible credit downgrade for SC
"As we go forward when we look at the issues that face South Carolina, I think there are two main issues that directly affect the stability and solvency of where we want to go in the state and one is Medicaid and how we are going to deal with Medicaid and one is retirement system," Gov. Nikki Haley said.
"As things stand now it looks as if current year revenues are coming in almost, almost 7 percent over the last fiscal year, current year against last fiscal year, much of that improvement has come from individual income tax collections," Comptroller Richard Eckstrom added.
In a release the treasurer's office said Moody TMs Investor Service will be conducting a credit review of select states including South Carolina within the next 90 days. According to Moody TMs, in order for South Carolina to earn a stable outlook, the state must maintain credit quality higher than that of the federal government in the event the U. S. government's credit would be downgraded.
Maryland, New Mexico, Tennessee and Virginia, also have AAA ratings but were given negative outlooks with ratings indirectly linked to the U. S. government.
What do you think about South Carolina's credit rating having the chance to be downgraded? Leave a comment below with your thoughts.