State maintains highest bond rating

Missouri will remain economically stable through 2006 as long as Gov. Matt Blunt enacts his promised reductions in state spending, according to Moody’s Investors Services, which helps determine Missouri’s bond rating.
Moody’s Investors Service said March 8 that the state will retain its AAA rating, meaning bonds issued by Missouri are judged to be of the highest quality by investors. The rating also signals that the bonds carry the smallest degree of investment risk.
As part of its analysis of the state, Moody’s reported that Blunt’s effort to reduce state spending on Medicaid by $231 million would be critical to reining in costs and maintaining Missouri’s bond rating.
“The outlook for Missouri is stable, based on expectations that the state’s financial results during the remainder of fiscal 2005 and the early part of 2006 are in line with forecasts, and that proposed reductions in spending such as those proposed by the governor will be enacted, helping remove the state’s need for nonrecurring budgetary measures,” Moody’s report said.
The service added that, while it’s unknown whether the state legislature will pass the proposals, the service expects that the state will “take action to rein in Medicaid funding requirements as part of a broader effort to return to structurally balanced operations.”
The report is also good news for school districts, which could see their bonding capability seriously impacted if the state were to lose its high rating.
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