State's Bond Rating Dropped a Notch in Coal Freefall
Standard & Poor's has dropped West Virginia's bond rating amid the coal industry's downturn.
The agency announced the drop Thursday from AA to AA-minus. It also said the rating's outlook is stable.
Standard & Poor's credit analyst Nora Wittstruck said the downgrade was due to weakness in the energy sector, and particularly, coal. The agency views the challenge as long-term, not cyclical.
Standard & Poor's praised West Virginia's Rainy Day Fund and demonstrated willingness and ability to tackle large-scale financial challenges. The agency cited progress addressing unfunded pension liabilities.
Amid falling coal and natural gas revenues, West Virginia's still hasn't passed a budget for the fiscal year beginning July 1. The Republican-led Legislature and Democratic Gov. Earl Ray Tomblin are negotiating tax hikes, cuts and use of reserves.
Gov. Tomblin had this to say in a press release regarding the rating.
"Throughout my years of public service, I've worked hard to create a strong West Virginia by improving the state's business climate, addressing our long-term liabilities and creating one of the strongest Rainy Day Funds in the country. Over the past four decades, we've made significant progress. Today's announcement by Standard & Poor's is disappointing, however it is not entirely unexpected as other states whose economies are largely dependent on the energy sector have experienced similar actions.
"Continued economic growth will take time, and in the short term it cannot fix the significant challenges we face as a state. For months, I have urged the Legislature to adopt a responsible, structurally sound budget. Based on today's action, objective analysts on Wall Street agree.
"If we don't take proactive steps to develop a stable path forward that does not rely on one-time monies and even deeper cuts to cover long-term and recurring needs, the economic and budget challenges facing our state will only get worse. We have worked too hard and come too far to allow that to happen, which is why I continue to push for a budget that takes into account the systemic changes in our state's economy and will put us on the path to a brighter financial future."