State’s credit rating downgraded

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BATON ROUGE, LA – Moody’s Investors Service downgraded Louisiana’s credit rating today in a move that will make it more expensive for the state to borrow money for construction projects, according to State Treasurer John Kennedy.

John Kennedy is Treasurer for the State of Louisiana.
John Kennedy is Treasurer for the State of Louisiana.

“You can’t spend more taxpayer money than you take in for seven years in a row and not expect a downgrade to your credit rating,” said Treasurer Kennedy. “You also can’t make public statements about suspending TOPS, ending LSU football, closing Nicholls State University and closing five prisons without scaring the daylights out of the credit rating agencies that grade our debt and the institutional investors that buy our debt. What we tell our children is true: Acts have consequences.”

Moody’s changed the state’s credit outlook from stable to negative in February 2015. The last downgrade occurred in November and December 2005 after hurricanes Katrina and Rita. Prior to 2005, the last Moody’s downgrade occurred in 1987.

Governor John Bel Edwards released the following statement on Moody’s Investors Service downgrade of Louisiana’s credit rating:

Gov. John Bel Edwards
Gov. John Bel Edwards

“This is a disappointing development, particularly since we believed that Moody’s would wait until the conclusion of the special session to make any decision on our rating. Unfortunately, the downgrade confirms what we’ve been saying about the structural imbalance of our budget. The overuse and abuses of one time money and fund sweeps by the Jindal Administration were a major factor in this decision. It also reflects the global concern about the decline of oil prices and its impact on producing states. It is more important than ever for the legislature to work with me during this special session to stabilize our budget and repair the damage of the last eight years. We can do this by transitioning to a new tax structure that conforms to best practices promoted by organizations such as the Tax Foundation, which will help us achieve long term fiscal stability and predictability in Louisiana.”