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WV’s bond rating downgraded for 3rd time in a year


Charleston Gazette-Mail

CHARLESTON, W.Va. — Gov. Jim Justice said the downgrade issued Tuesday of West Virginia’s bond rating — the third downgrade in the past year — “just makes me sick,” and admonished the Legislature for failing to address structural problems in the state budget.

Gov. Jim Justice reads a letter from Jenna Meredith Stout, 9, telling him about her father moving out of West Virginia for a job, during an announcement made with Revenue Secretary Dave Hardy that Moody’s Investors Service had downgraded the state’s bond rating Tuesday.
(Photo by Chris Dorst)

Justice held a 12-minute news briefing Tuesday afternoon, minutes after Moody’s Investors Service downgraded the state’s bond rating from Aa2 to Aa1, citing the “recent multi-year trend of growing structural imbalance between annual expenditures and available resources.”

That means, in the past year, all three of the “big three” credit rating agencies have downgraded West Virginia’s bond ratings. Last April, Standard and Poor’s downgraded state bonds from AA to AA-, while, in September, Fitch issued a downgrade from AA-plus to AA.

“This just tears at my guts. It’s the very reason I ran for this office,” said Justice, reprimanding a Legislature that he said has refused to address fundamental budget problems.

“All we want to do is kick the can down the road,” he complained, saying it is “time to wake up” and address the budget crisis.

“We’ve got to do something, and I’ve put together a proposal of how we can be on a pathway to prosperity and climb out of this mess,” Justice said.

In his State of the State address, Justice proposed raising about $400 million in taxes to help close a nearly $500 million shortfall in the 2017-18 state budget — a proposal largely rejected by legislative leaders who say they will present an alternative plan relying predominately on budget cuts.

“If we think we’re going to cut to the bone, and we’re going to miraculously be able to cut our way out of this mess, … there’s no chance on God’s earth we can ever even think about doing that,” Justice said Tuesday.

He also faulted a legislative proposal to refinance a 40-year plan to pay down massive unfunded liabilities in state pension funds, noting that the Moody’s report warns that failure to make the annual pension contributions in full could lead to further downgrades in the state’s bond rating.

“That’s one of the big things that Moody’s said: If you do that, you’re even more unstable,” the governor said.

In an unusual juxtaposition, Justice read not only from the Moody’s report but also from a letter he received from a 9-year-old girl whose father left West Virginia on Monday to find work, in which she asks, “Please help me not leave West Virginia.”

“We’re better than this. That’s all there is to it,” said Justice, who left the briefing without taking questions from reporters.

In response, Senate President Mitch Carmichael, R-Jackson, issued a statement saying the bond rating downgrade is a call for fundamental reform of state government.

“The old policies of simply raising taxes and spending more will only lead to further structural deficiencies and continued downgrades,” Carmichael said. “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.”

Similarly, House Speaker Tim Armstead, R-Kanawha, issued a statement saying the bond downgrade reinforces the need for change from the “tax-and-spend” policies of the past.

“We need bold leadership to right-size our state government and restructure our tax code in a way that promotes growth,” he said. “The proposal to increase spending by another $318 million and pay for it with the largest tax increase in the history of our state will not solve our budgetary challenge.”

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