Moody's on the Sidelines
Thursday, May 04, 2006 :::
In 204, the tax fight was all about the bond rating. A failure to raise taxes would result in a downgrading of Virginia's debt, making it far more expensive for the state to fund long-term, debt-dependent programs. This year, the bond house that gave Gov. Warner and tax proponents all the cover they needed is sitting on the sidelines. Micheal Shear has this look at why Moody's Investor Service isn't concerned about the current budget struggle:
In an April 24 report on some of the state's upcoming bonds, Moody's noted that "the current situation adds a small degree of uncertainty, although it is expected that the budget situation will be resolved well before the first interest payment on the bonds is due in November 2006."
And if that wasn't enough of a blow to the pro-tax forces, there's also this:
"The fact that the roads are choked in Northern Virginia doesn't seem to be affecting the larger economic results," Kurtter said, noting the job growth and booming economy in the region. "It's pretty hard for us to say that failure to fund transportation projects in 2007 is going to wreak havoc on the state's economics."
He added: "We are much more immediately concerned with fiscal shortfalls."
Even Shear is forced to acknowledge the impact of this assessment: "Ouch."
The only hope the Senate and the Governor really have of enlisting this old ally is if they are able to force a government shutdown. The House has already positioned itself to address this, proposing a budget that will keep government's doors open while taking up the transportation issue separately. The Senate wants none of that, obviously. The budget and the threat of a shutdown are their only weapons. Take them away, and they have nothing.
Now who are the extremists here?
::: posted by Norman Leahy at 5/04/2006