Moody's flags WA risk
- Moody's warned Washington could face bond-rating pressure after drawing down its rainy-day fund and showing weak reserves. (x.com) - Social summaries noted the state ranks roughly '50/50' in reserves compared with peer states, raising fiscal concern. (x.com) - That fiscal pressure is being cited as background to difficult budget choices affecting services and land management. (x.com)
Moody’s has put Washington state on a negative outlook, warning that repeated use of reserves could strain its top bond rating. (washingtonstatestandard.com) The ratings agency did not cut the state’s Aaa rating, but it said Washington has been balancing budgets with reserves and other one-time fixes instead of recurring revenue. Moody’s made the outlook change on Wednesday, and the warning was reported April 24. (washingtonstatestandard.com) In the budget signed April 1, Gov. Bob Ferguson approved a roughly $79.4 billion supplemental operating plan that pulls $880 million from the Budget Stabilization Account, Washington’s rainy-day fund. The same package also transfers $375 million from the Public Works Assistance Account to the general fund. (tacomadailyindex.com, wacities.org) Washington’s treasurer, Mike Pellicciotti, said before the budget passed that the state’s rainy-day fund ranked last among the 50 states and called another drawdown risky. House Speaker Laurie Jinkins said the reserves were needed to avoid deeper cuts, including in schools, while lawmakers balanced a gap nearing $2 billion. (king5.com) The pressure point is not just the rainy-day fund. Washington State Standard reported total reserves are projected to fall to 1.4% by the end of fiscal 2028, far below Pellicciotti’s recommendation that total reserves equal at least 10% of general fund revenues. (washingtonstatestandard.com) Across the country, state cushions are thinning. The Pew Charitable Trusts reported in March that the median state could run operations for 47.8 days on rainy-day funds alone at the end of fiscal 2025, down from 54.5 days a year earlier. (pew.org) Washington officials are trying to show a longer-term fix. Ferguson signed Senate Bill 6346, the state’s new tax on income over $1 million, on March 30, but the tax does not begin until January 1, 2028, with first payments due in April 2029. (governor.wa.gov, fnspublic.ofm.wa.gov) That timing leaves the current budget leaning on cash transfers and delayed backfills. The Association of Washington Cities said the final budget pairs the $375 million Public Works Assistance Account sweep with $279.5 million in bond revenue, a move cities opposed because the account finances local infrastructure loans and grants. (wacities.org) For now, Washington still holds its top rating. The warning from Moody’s means the next budget cycle, not this week’s headline, will decide whether that standing holds. (washingtonstatestandard.com)
