Bond ratings unaffected.
S&P Global Ratings issued the following press release on March 1.
S&P Global Ratings revised the outlook to negative from stable and affirmed its 'AA' long-term rating on Mississippi's general obligation (GO) debt outstanding. We also affirmed our 'AA-' long-term rating on the state's appropriation-backed special obligation bonds and lease revenue certificates of participation. In addition, we affirmed our 'A' long-term rating on the Mississippi Development Bank's debt outstanding, reflecting the state's moral obligation pledge on various obligations issued on behalf of counties, municipalities, and districts.
The outlook on all ratings is negative.
The state's full faith and credit secures its existing GO debt. The state's appropriation-backed special obligation bonds and lease revenue certificates of participation are rated one notch below the state GO rating, and the Mississippi Development Bank bonds are secured by the state's moral obligation pledge are rated three notches below the state GO rating, based on the application of our "Issuer Credit Ratings Linked To U.S. Public Finance Obligors’ Creditworthiness" criteria, published Nov. 20, 2019.
"The outlook revision reflects our view of elevated credit risks stemming partly from persistently weak economic and demographic trends, which could result in an increasingly challenging budget environment as the state manages through its phased-in income tax reductions.," said S&P Global Ratings credit analyst Rob Marker. "The risk of future budgetary pressure is further elevated due to pension contributions falling short of their actuarially determined contribution amounts in each of the past three years and a relatively high level of unfunded pension liabilities. Finally, recurring delays in adopting the state's annual revenue forecasts or a reduced commitment to debt management policies could worsen our view of the state's budgetary performance and Financial Management Assessment," Mr. Marker added.
The long-term rating reflects Mississippi's strong government framework and responsive financial and budget management practices that have historically aided structurally balanced budget performance and maintenance of strong reserve balances.
Certain terms used in this report, particularly certain adjectives used to express our view on rating relevant factors, have specific meanings ascribed to them in our criteria, and should therefore be read in conjunction with such criteria. Please see Ratings Criteria at www.spglobal.com/ratings for further information. Complete ratings information is available to RatingsDirect subscribers at www.capitaliq.com. All ratings affected by this rating action can be found on S&P Global Ratings' public website at www.spglobal.com/ratings.
Kingfish note: The report noted the three-year average funding level for PERS was 61%, no doubt causing heartburn to the ratings agency. The squabble between the Governor and the Legislature over the revenue forecasts played into the negative outlook as well. However, S&P has always been a little more critical of Mississippi than other ratings agencies.
Keep in. mind the ratings for Mississippi's bond issues remains unchanged.
29 comments:
Why do I feel like I’m on the deck of the Titanic and the band is playing while we put on our life vests?
Our state leaders are doing such a good job! Let's keep reelecting each and every one of their dumb asses.
Rating agencies starting to smell what the legislature is up to with PERS. The timing is no coincidence If the legislature keeps F’ing around we will have junk bond status soon.
So the way to get a better rating for a state that can't meet it's obligations is to cut state revenues by doing away with the state income tax. Is this some of that there Voodoo economics I've heard about ?
Great time to do away with State income tax!
This a nothing burger. 20 years from now, yeah it’s gonna start getting real. But all those people in charge now will be gone.
Y’all stay put in MS. I decided a long time ago if I was going to live somewhere third world then I would rather live in Asia. Here I am at 3 am in my condo in Phuket with two beautiful live-in girlfriends, collecting my PERS and laughing at you all!
This is nothing now. Give this a couple of decades to marinate and it will be some other generation’s real problem, and all those in charge now will be living on 13 checks a year.
Is there any state with a lower credit rating? If so, please answer.
Sure hope the retirees have been good at saving their money. Too bad. Had they demanded proactive reforms years ago they probably would have only received a trim.
Great time to expand Medicaid entitlement and spending! We’re already broke and can’t pay state retirees, let’s add more folks to Medicaid rolls! No wonder Mississippi stays last in everything!
Thank you fearless leaders🤬
Do y’all think any of the financial problems Mississippi is facing have anything to do with the majority of its citizens not working, not paying taxes and living rent free off of gubmint entitlements?
I am unable to respect the thoughts of anyone that uses the phrase "nothing burger."
Decades of full Republican control in this state but the goobers still blame the Dems.
Why would Chokwe do this?
@3:35. You may need to sign up for a macroecon class at the local community college. The fact that we are 1 of 10 states that haven’t expanded Mississippi’s economy by 10X with federal match, you need to read up a bit. This is likely a contributing factor to the downgrade as ratings agencies don’t look at states in a vacuum.
S&P is twenty-five years late. I revised my Mississippi outlook to negative in 1999.
4:50, so if expanding Medicaid is an economic contributor to the state’s financial condition, why wouldn’t every state put everyone on its rolls? If it’s so great for their economy, everyone should get it, correct?
@217 - this is not the result of the current state leaders - this started well before this year. The big problem, as stated by the rating bureaus, is PERS. And that problem was created in 1999 when the legislature decided to add significant benefits with no funding to cover those benefits --- believing that the dot.com economy left us by Billy Jeff Clinton would last forever. And it did; for a year.
Providing a guaranteed 3% cost of living addition every year, and COMPOUNDING interest on that COLA, was the biggest gift. Of course the legislature that year (check the status and see who controlled that body, before you continue to blame the 'current' leadership) did that because (1) it was an election year, and (2) they decided to give themselves a nice retirement benefit in the same package with the SLURP addition.
For those that want to claim the current bill is not a solution - they are only looking at the change in the structure of the board, which is a badly needed change. The current board is nothing more than the fox guarding the henhouse --- beneficiaries deciding on how to keep the system solvent. And their solution is always ---- increase the employer contribution. It of course is never adjust benefits, or even (don't even think it) increase the employee contribution.
Yes, the board needs to be changed so that people who are not beneficiaries are looking at how to make it sound. But No, ignoring the current status of the system, kicking the can down the road and blocking any changes to be made this year is not sound policy.
While making the change of the board structure, also consider fixing the benefits. Get rid of the fixed COLA (no other system, including of course Social Security, has such a ridiculous policy.) Get rid of the compounded interest on this COLA. Quit the "high four" that so many benefit from, particularly those that spend most of their life in part-time positions and go to the running 30-year average or some such determination. Also stop the stacking that many have learned how to play.
Overall, fix the things that allow some folks to make more off their '13th check' (the COLA and Compound) than they ever made as an employee.
And all these things were done, not by the 'current leadership' but by those that no longer haunt the Capitol but do enjoy their PERS checks.
For those that say you can't touch the current employees, or the current beneficiaries, because it was promised - lets think of another approach. Tax retirement benefits in Mississippi, or at least tax the 3%COLA Compounded Interest.
3:06 is living the dream. I salute 🫡 you sir
PERS obligations will bury MS.
Just drive around MS. Jackson and west of I-55 from TN to LA are mostly now experiencing 3rd world economic situations. Every city and county should have a strategic plan that explains their futures before it is hopeless. Jackson may be past of a turnaround opportunity, and the State should make a plan for Jackson's insolvency.
Anybody taking wagers on how fast the reportedly present day billion dollar surplus disappears into thin air?
BillionS needed for roads and bridges - crickets
BillionS needed for PERS - crickets
BillionS needed for healthcare infrastructure - crickets
BillionS needed for mental healthcare system - crickets
BillionS needed to sustain the gargantuan bureaucracy of K-12 and higher ed
(that is no longer warranted). - crickets
In the not too distant future, politics in MS is gonna get ugly and will be interesting to see who has the stomach for it when the sh#t really hits the fan for real - and yes, Jacktown is the canary in the coalmine.
5:20, 40 other states are spending federal tax dollars that Mississippians and MS corporations pay the federal govt. with the 90% match. That money pays for medical services and salaries in the state, thus increasing the size of the economy. May need to lay off the Supertalk and Fox and hit the books. It’s not that difficult if you think about it critically.
The legislature has refused to fund OERS at the required level the last three years putting the pension into worse shape. Now the Governor and LT Gov want to seize control of the plan. The current board h has done its job well, but the problem is the legislature hasn’t properly funded it.
@12:54pm The Legislature isn't "failing to fund PERS".
PERS was set up for failure to begin with by not tying required contributions by the employer and employee to actuarial calculations.
They aren't fixing it because it would be extremely painful to fix now and even though prior legislators created the problem, they would be the ones blamed for fixing it. The fix gets more painful every year that they sit on it, but that doesn't change the incentives for them.
The PERS board, however, had plenty of opportunities to rally PERS members to acknowledge the problem needed to be fixed before it got too bad to fix. But they all made the calculation that they could keep their sweet benefits and it would only screw future taxpayers and participants for them to just ignore the problem, so that's what they did. THe board absolutely needs to be replaced, although it probably won't help at this point. Maybe if they gave the Board the authority to reduce benefits currently being accrued they could create the political buffer to let the problem be addressed going forward at least.
It will be an uphill legal battle to force current recipients to take a reduction in their COLA, even though that is the most moral option available to help spread the pain.
@3:44 thanks for your insight into this issue.
But the new roads and paving in Hattiesburg and Rankin County are so nice. If only so many of the new buildings weren't so strip mall ugly.
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