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Moody's Issues 'Credit Negative' Outlook For Oklahoma

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One of the nation's top rating agencies is issuing Oklahoma a "credit negative" warning amid the state Legislature's inability to close a $215 million hole in its budget for the current fiscal year.

Moody's Investor Service issued the credit outlook for Oklahoma Monday in its latest credit bulletin on U.S. public finance.

The rating agency noted that while the estimated budget gap is only 4 percent of general fund spending, it is meaningful. It pointed specifically to the legislative budget impasse that has stretched on for nearly six weeks.

Oklahoma's GOP governor and Republican-controlled House and Senate have not been able to reach an agreement on any long-term revenue measures. The agency also warns that using one-time revenue sources will make future Oklahoma budgets more difficult.

Gov. Mary Fallin issued the following statement on the state's credit outlook:

I have warned lawmakers for the past three years that we need to address our budget’s structural deficits instead of continuing to kick the can down the road by depleting available cash and using one-time funds. Proposals to do just that will not provide enough funds for agencies to deliver essential core services for the remainder of this fiscal year.  It appears we are looking at a budget that will include drastic across-the-board cuts for all state agencies to deal with the loss of revenue. It is worth repeating what Moody’s Investors Service stated in its report: the state of Oklahoma has reduced appropriations by 5.3 percent, or $387 million, in the past three years.

The Legislature’s inability to pass a permanent solution to our budget challenge has resulted in Moody’s, one of the nation’s top rating agencies, giving Oklahoma a ‘credit negative’ outlook, which will hurt investment by businesses that are considering to expand in or move to our state.

“There are still conversations going on between legislative leaders and my office. It’s my hope that we make progress in filling the $215 million budget hole with recurring revenue; provide long-term revenue stability; give our teachers a pay raise; and move Oklahoma on a path forward to being a great place to live, work, invest and raise a family.

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