New York’s fiscal condition received a boost today as Moody’s Investors Service changed its outlook from stable to positive on $3.5 billion in bonds.
The credit agency also affirmed the state’s Aa2 rating.
“The positive outlook reflects improvements in the state’s economy, governance, financial position and fiscal outlook that, if continued, would allow the state to improve its reserves and draw closer to structural balance,” Moody’s said in its report today.
Moody’s said New York’s credit rating has been boosted because of the improving economy, the end of late state budgets and a “financial position that has improved but remains below average; a moderate combined debt and pension burden; and sound debt management and frequently updated financial forecasting.”
Moody’s said New York’s pension is well funded compared to other states and the “unfunded liability is modest.”
It even cited the “recent reversal of history of political gridlock, reflected in timely budgets, implementation of spending controls and move toward structurally
Still, Moody’s warned that things could quickly change because of New York’s dependence on the “financial services sector and income taxes, posing risks to budgetary balances, liquidity, and financial stability.”
The state’s fiscal picture could also darken if there’s an “economic downturn resulting in lower revenues and larger budget gaps.”
Updated: Gov. Andrew Cuomo praised the report.
“Today’s action by Moody’s Investors Service to revise our State’s outlook from stable to positive is another strong affirmation of the progress we have made to put New York’s fiscal house in order. After years of late budgets and legislative gridlock, we have been able to show that New York State is working again and confidence in government is being restored,” Cuomo said in a statement.
Comptroller Thomas DiNapoli said the Moody’s review was a positive step for the state.
“It reflects positively on the steps the Governor and the Legislature have taken in recent years to improve the state’s cash position, control spending and reduce out-year budget gaps,” he said in a statement. “I am pleased that, among other factors, Moody’s also points to our well-funded pension system as a credit positive.”