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Statement on S&P lowering of Oklahoma's debt ratings

Wednesday, March 01, 2017

Standard & Poor’s Global Ratings has lowered Oklahoma’s various debt ratings one notch due to sustained weak revenue collections. S&P’s report can be viewed here

"This report highlights several things that we've been saying for some time now," said Secretary of Finance, Administration and Information Technology Preston L. Doerflinger. "We need to fix the structural budget deficit and our revenue problem."

S&P lowered general obligation bonds and appropriation debt backed by the state’s credit enhancement reserve fund one notch from AA+ to AA and the state’s appropriation debt from AA to AA-. S&P also assigned its AA- rating to the Capitol Restoration Project bonds.

“The downgrade reflects our view that persistently weak revenue collections — leading to a declared revenues failure for the remainder of the fiscal year (2017) — have further compounded the state's challenge to achieve structural balance in fiscal 2018,” the report noted.

S&P further explained that future ratings could drop or rise depending on what actions are taken to improve Oklahoma’s structural budget deficit:

“In the absence of meaningful structural reforms that align revenues and expenditures and that do not materially depend on one-time budget solutions or measures that carry significant implementation risk, we could lower the ratings,” the report states. “A recovery in economic indicators, improvements in state revenue performance that we view as sustainable, and growth in reserves could lead us to raise the ratings.”

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