Rooted in Reason: Nurturing the Seeds of Liberty

The Bad News Bonds by maliab
June 21, 2011, 4:33 pm
Filed under: Economy, Hawaii Sunshine | Tags: , , , ,

Star-Advertiser columnist Richard Borreca recently wrote about Hawaii’s continuing bond-rating troubles.  As Borreca notes, both Moody’s Investor Services and Fitch Ratings have downgraded the state’s bond ratings.  (Not that this is anything new, as regular readers of this blog can attest.)  So, yet again, the state financial woes get a little worse and the hole we’re digging for our children gets a little deeper.  Here’s what Borreca reports from the two ratings agencies:

Clearly not believing the vows that we must balance the budget every year, the agency warned that in the real world, this year’s tax increases may be permanent.

“While the plan projects that ending balances will grow from the projected fiscal 2011 level, absent extension of the temporary tax increases or offsetting spending reductions in the next biennium, Fitch expects it may be difficult to retain those balances in future years,” said the June 15 report.

Moody’s, which issued its report last month, was no more upbeat.

“We expect available balances will also be negative at the end of fiscal 2011, representing three consecutive years of balance sheet deterioration,” wrote the Moody’s analysts.

They also had a difficult time believing the “temporary” tax increase was only temporary.

“The Legislature could decide to keep the temporary measures in place in the future in the event of continued revenue underperformance,” Moody’s suggested.

Just one note–Borreca overlooked the massive liability belonging to the state Employees Retirement System–one of the most broken pieces of our limping state financial situation.  One wonders when Hawaii’s lawmakers are going to wake up to the fact that this isn’t the kind of problem that they can simply wish away.


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