Governor Walker Reacts to Downgrade of Alaska’s Credit Rating
July 14, 2017 JUNEAU —Governor Bill Walker reacted to Moody’s announcement yesterday evening that Alaska’s credit rating has been downgraded to “Aa3” and remains on negative credit watch. The report cites “the large structural imbalance that the state has still not rectified, and the ongoing spending of the state's reserves”. It also warns that, “as the state's reserves diminish, its options to close the budget gap narrow and the consequences should it fail to do so intensify”.
“Today’s announcement from Moody’s is concerning but not surprising,” Governor Walker said. “The agency’s analysts note that Alaska is essentially in the same position as last year: the budget is imbalanced by several billion dollars, and the legislature has not yet adopted a complete fiscal plan to remedy the situation.
“When I took office, I made long-term fiscal stability a top priority of my administration and warned of the consequences of legislative inaction. We now see those consequences coming to fruition. In spite of significant financial reserves and the lowest tax burden in the nation Alaska continues to operate with a structural budget imbalance that is, according to Moody’s, both unstable and unparalleled by any of the other 49 states. In the last three years, Alaska has gone from the highest credit rating in the nation to the 3rd-lowest, better than only Illinois and New Jersey. We simply cannot afford to wait any longer to take our finances and budget issues seriously. Alaskans are depending on us. I will continue to work to resolve Alaska’s fiscal problem this year.”
Timeline of Alaska’s Credit Ratings
- March 3, 2015 – Moody’s, S&P, and Fitch Ratings separately affirm Alaska’s AAA bond ratings
- November 2, 2015 – S&P optimistic Alaska will enact long-term, structural reforms to close $3.5 billion deficit
- January 5, 2016 –S&P lowers Alaska’s credit rating to AA+ negative, citing declining oil prices and a lack of adoption of a comprehensive fiscal plan
- February 29, 2016 – Moody’s lower Alaska’s credit rating to Aa1 negative, again citing low oil prices, declining savings, and lack of a complete plan.
- June 14, 2016 – Fitch lowers Alaska’s credit rating to AA+, citing lack of a complete fiscal plan.
- July 25, 2016 – Moody’s again lowers Alaska’s credit rating to Aa2, citing inability to address structural fiscal challenges, and lack of a complete fiscal plan.
- June 20, 2017 – S&P places Alaska’s credit rating on negative CreditWatch, citing continued reliance on savings and lack of new revenues.
- July 13, 2017 – Moody’s again lowers Alaska’s credit rating to Aa3, citing continued inability to address structural fiscal challenges, and lack of a complete fiscal plan.