Key credit rating decision could cost Louisiana taxpayers
BATON ROUGE- The Jindal administration's top financial adviser expects Louisiana to keep its negative credit outlook when its rating is updated later this summer. Department of Administration Commissioner Kristy Nichols says the state will likely have a negative credit outlook until a new governor is elected.
In a few weeks, two national rating agencies, Moody's Investors Service and Standard & Poor's Rating Services, will update the state's credit rating. Currently Louisiana has a AA rating from both agencies, a high rating according to Nichols.
In February, the two agencies downgraded the state's credit outlook from stable to negative, putting the Jindal administration on notice for a possible credit downgrade. The agencies were concerned by Jindal's use of short term money to patch long term budget holes.
A credit downgrade would make borrowing money for state projects more expensive, costing tax payers in the long run. Treasure John Kennedy says it also discourages businesses from relocating to the state.
The two agencies are examining the state's recently passed budget. Nichols is optimistic that the state will maintain its AA credit rating because the budget relies on a higher level of recurring money from tax increases and tax credit roll backs.