Saturday, July 27, 2002

The Stuff You Learn Just By Looking It Up

Remember the flap during the Income Tax War about how the State's "revenue problem" led Moody's and Fitch's to lower the State's bond rating? The CA certainly played it up.

But this story, via the Associated Press' Karin Miller, another foot-soldier in the pro-IT journalism army, paints a different picture. She cites almost verbatim from the State Comptroller's Office's terse report, which referenced a Moody's report that was released way back on July 18th, and is not now accessible on the Moody's site. Why did it take so long for this story to come out?

Her article repeats the old story:
The state relies heavily on consumption-based taxes such as the sales tax that don't grow at the same rate as the economy, the agency said in its rating update.

Then she almost immediately contradicts the Comptroller:
"Near-term economic growth is expected to generate sufficient revenue to balance expenditures for the next few years," Moody's said.

But then comes this (slight) puzzler:

Standard & Poor's took similar action earlier in the week, removing the state from credit watch, keeping its general obligation bonds rated at AA and saying the long-term outlook remains negative.

Similar? Removing us from credit watch? That's better news!

And it still remains that after the worst, most bruising battle ever in the Legislature, resulting in the penny sales tax increase that the State's papers call every bad name in the book, in the failure of the IT that every paper called our salvation, that we still maintain our rating. There's a disconnect here.
Until 2000, Tennessee had been one of just nine states with the top credit rating - AAA - from all three major agencies.

The year that Governor Sundquist's ever-growing budgets got caught by the recession.
It was lowered a year after Tennessee lawmakers began balancing the books with a series of accounting gimmicks and the use of nonrecurring funds.

A year later? Where's the causal connection then?

"Accounting gimmicks" that the citizens, and the papers, decried, but they did anyway. And by not reining in spending, but increasing it.

Then comes this zinger from Fitch's:
"With the passage of the 2002-2003 budget which increased taxes, it would appear that the state of Tennessee will be able to return to structural balance, assuming revenue estimates are reasonably realized," Fitch said in its report.

Waaaaaaaaaaaaaaaaaaiiiiiiit! Isn't our budget described by the papers as "structurally flawed?" Seems the pros think differently.

In trying to locate the Moody's and Fitch's reports directly, I was unsuccessful. However, I did locate a fascinating Moody's report on the health of Tennessee cities and counties. It paints a good and very different picture than the one we're used to hearing from the papers. I strongly encourage readers to check it out.

Until next time,
Your Working Boy

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