CHARLESTON, W.Va. — After a conference call last week, state Senate Finance Committee Chairman Mike Hall expects Wall Street bond rating agencies to take a closer look at the state’s financial issues.
Hall was part of that call with members of the Tomblin administration and others. On the other end of the line were representatives of three bond rating agencies, Hall (R-Putnam) said Monday on MetroNews “Talkline.”
“One of them said, ‘We like your presentation but we really are going to take a closer look at what you guys are doing,'” Hall said. “I think they’re still believing.”
The governor and legislature had to take $84 million out of the state’s Rainy Day Fund to help balance the budget from the recently ended fiscal year. The state faced a revenue hole topping $400 million and it could be as much as $200 million in the 2017 budget year.
Hall said the bond rating agencies want West Virginia to prove its revenues can equal its expenditures. Hall believes there will have to be a tax increase and a restructuring of state government. Those are tough decisions that have to be made, Hall said.
“We are so close to maintaining a fiscally responsible reputation to the watching world—if we can just take one of these difficult steps in the next two or three years,” Hall said. “I hate to see us throw away our financial reputation.”
The bond rating agencies did like a bill passed during the recent special session that would allow the state to pay its bond obligations even if the government would shut down, Hall said.
“That was important to them to know that the state had a vehicle in case this thing would have shipwrecked and we would have closed the government down,” Hall said.
Citing the free fall of the coal industry, Standard & Poor’s downgraded West Virginia’s bond rating in late April from AA to AA-minus. Analysts said they expect the coal weakness to be a “long-term challenge” rather than a “cyclical setback.”
The Rainy Day Fund balance is currently more than $700 million.