NASHVILLE – Gov. Bill Haslam, Lt. Gov. Ron Ramsey and other state officials have assured New York-based credit agencies that Tennessee is better prepared that most states to deal with federal spending cutbacks and deserves to retain its AAA bond rating.
Representatives of Moody’s, Standard & Poor and Fitch’s credit rating agencies all seemed to have a positive response to the Tennessee pitch, though they their formal response is probably about a month away, Haslam said Wednesday in a telephone news conference.
Finance Commissioner Mark Emkes has all state government departments draft plans last month on how they would deal with up to a 30 percent reduction in federal funds they now receive. That, the state’s long-standing reputation for fiscal prudence and other factors seemed to impress the rating officials, Haslam said.
Moody’s recently put the Tennessee and four other states on a “negative outlook” for possible future downgrade in credit rating, citing what it characterized as a heavy overall dependence on federal spending in the states’ economy.
But Haslam said that, if TVA’s impact is excluded, Tennessee’s economy has about 16 percent of its economic base in federal spending – slightly less than the average of other states. With TVA included, the level rises to about 17 percent, roughly equal to the average, the governor said.
TVA should be excluded, he said, because its budget is not tied to federal spending in Washington and thus not impacted by federal cuts in other areas.
Note: Link to Ramsey’s full statement is HERE.
“We walked through why we don’t think Tennessee is any more susceptible to federal cutbacks than any other state,” said Haslam.
Joining Haslam and Emkes on the trip were Ramsey, state Comptroller Justin Wilson, state Treasurer David Lillard and Secretary of State Tre Hargett.
Haslam said Ramsey was on hand to explain that the Legislature would stand ready to deal with any reduction in federal spending in conjunction with the governor’s office.
Ramsey, in a facebook post that was also emailed to media, Ramsey declared the national economy “is in a tailspin” because of “the Obama administration’s fiscal policy.”
“Considering the national outlook, Tennessee is in an outstanding position,” Ramsey said. “Few states could even dream of making the impressive case we did these past two days. While the nation trends downward, Tennessee is looking up toward the horizon.
“We were able not only to relay our confidence to the bond agencies in New York – we were able to back it up with numbers,” Ramsey said.
For example, he said Tennessee’s unemployment trust fund balance stands at $381 million “and we are one of only six states that have no outstanding obligation to the federal government” while the state added $70.4 million to it “rainy day fund” in the current year’s state budget.