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Moody’s downgrades WV’s bond rating

From staff reports

The State Journal

CHARLESTON, W.Va. — WV Gov. Jim Justice and Revenue Secretary Dave Hardy addressed members of the media Feb. 21 to discuss a recent report from Moody’s that downgraded the state’s general obligation debt rating.

Moody’s Investors Service downgraded West Virginia’s general obligation debt to Aa2 from Aa1, which affects about $393.6 million in debt outstanding, the agency said, and it also downgraded related lease ratings.

The downgrade “reflects the recent multi-year trend of growing structural imbalance between annual expenditures and available resources,” Moody’s states in its news release. “While the state has used a mixture of revenue enhancements, expenditure reductions and reserves to close budget gaps, revenues continue to lag budgeted estimates and the structural imbalance is likely to continue at least through 2018.”

After a roughly 40-minute delay, Hardy opened the news conference by saying he and Justice had to wait for Moody’s to post the news to its website.

Hardy said a year ago Moody’s categorized West Virginia as “negative watch” because the other two agencies, Standard & Poor’s and Fitch Ratings, had downgraded West Virginia. Hardy said an analyst with Moody’s had said on the phone with them in the morning, “Your governor is not afraid to get his hands dirty.”

Justice expressed his displeasure with the report, saying “This just makes me sick, that’s all there is to it,” and ended the nearly 13-minute media event by saying he would not take any questions.

He then went on to compare the situation to a story about a person below a dam waiting on God to save him from flood waters, refusing help from a boat, a park ranger and a helicopter, eventually washing away.

“Well, as he goes to the pearly gates, he said, ‘Lord, I thought you were gonna save me,’ and he said, ‘I tried three times: I sent the park ranger, the boat and then the helicopter.

“We’ve been years, and we won’t react; all we want to do is kick the can down the road and we won’t react and we won’t do, and now we are where we are.”

Justice said the downgrade will hurt communities throughout the state.

“Our borrowing just got more expensive, no question, and the way to think about this is just think of our bond rating as your credit rating” he said. “You know, what happens to you when you’ve got bad credit?”

Justice said the state needs to continue making its current annual payments, such as the 40-year plan the state is on to pay its pension benefit debt, to maintain any stability. Justice said the same things Moody’s suggests as factors that could lead to an upgrade — including long-term growth and diversification of the state’s economy, improvement to the energy sector and significant reduction in debt and pension liabilities — are the same things he suggested during his Feb. 8 State of the State address.

Justice went on to read from a piece of paper he said was a letter addressed to him from a 9-year-old girl.

“Now, I’ve gotta read you just this, too,” Justice said. “This letter came to me from a 9-year-old kid, a beautiful little girl, and her name is Jenna Meredith Stout, I believe.

“She writes and says, ‘Dear Gov. Justice,’ she says, ‘I love, love, love The Greenbrier, even more than Disneyworld.’”

Justice purchased The Greenbrier out of bankruptcy in 2009. In September 2016, before he won the general election, Justice announced his daughter Dr. Jill Justice would take over his duties as president of the resort.

The governor continued to read from the paper saying the young girl’s father worked at NiSource and would be moving the family to Indiana for a job.

“Please help me not leave West Virginia because on Feb. 20 my daddy is leaving for a new job in Indiana,” the governor read. “She says, ‘I don’t want to leave West Virginia because my whole family is in West Virginia.’ Now, she said, ‘I didn’t get to come to The Greenbrier this year because my daddy doesn’t have a job.’”

Justice said he ran for the office of governor because “we’re better than this; we don’t need to have this story.”

“How many stories are we going to have to have like this, how many days are we going to have to be downgraded, how many more stories are we going to have before somebody wakes up and addresses the problem and does something about it?” Justice asked before ending the news conference.

Senate President Mitch Carmichael, R-Jackson, issued a statement saying years of fiscal mismanagement had led the state to its current situation.

“The bond downgrade underscores the urgency and the need for fundamental reform and a new direction in West Virginia,” Carmichael said. “The old policies of simply raising taxes and spending more will only lead to further structural deficiencies and continued downgrades. This news makes it abundantly clear the time for new policies cannot wait, and we will not turn this ship around with continued taxation and unchecked spending.”

The Associated Press reported Feb. 21 liens show Justice-owned companies owe West Virginia $4.4 million. The budget plan Justice proposed during his State of the State address to close a projected $500 million deficit included roughly $450 million in new taxes and $26.6 million in budget cuts as well as taking $123 million from the state’s rainy day fund.

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