While North Carolina currently enjoys a AAA credit rating from Standard and Poor's, it potentially could come to this:
TOPEKA — News that the state’s credit rating had been downgraded put a damper on Gov. Sam Brownback and U.S. Sen. Pat Roberts’ Republican unity celebration Wednesday morning.
Standard & Poor’s lowered Kansas’ bond rating to AA from AA+, citing the state’s unbalanced budget caused by income tax cuts signed into law in 2012. Though the state’s bond rating is still high, the downgrade is a signal to investors that Kansas bonds are a riskier investment than they were before the tax cuts.
"The downgrades reflect our view of a structurally unbalanced budget, following state income tax cuts that have not been matched with offsetting ongoing expenditure cuts in the fiscal 2015 budget," said Standard & Poor's credit analyst David Hitchcock in a release.
S & P also downgraded the state’s appropriation-secured debt to AA- from AA.
The rating agency gave the state a “negative” outlook on both ratings and projects that the state will face serious budget woes by the end of fiscal year 2015. "The negative outlook reflects our belief that there will be additional budget pressure as income tax cuts scheduled in future years go into effect, or if midyear revenue shortfalls resume,” Hitchcock said.
On the heels of Art Pope's planned departure as budget director for the state of North Carolina, the state's deficit, unlike Pope, won't be leaving anytime soon. But as Senate Leader Phil Berger offered praise for Pope, he kept the chorus going for the sound fiscal position of the state.
Then there's always fiction to counter truth: