New credit ratings methodology could hurt Hawaii - Hawaii News Now - KGMB and KHNL

New credit ratings methodology could hurt Hawaii

By Howard Dicus - bio | email

NEW YORK and HONOLULU (HawaiiNewsNow) - Moody's Investor Service has decided to use a new formula for figuring out the debt burdens of each state, and Hawaii could be hurt by it.

The New York Times reported Thursday morning that Moody's was recalculating state debt burdens including unfunded pension liabilities.

In some larger states, that unfunded debt burden runs to billions of dollars. But as a fraction of total gross domestic product, the small state of Hawaii has the most, equal to 16% of its entire economic output.

Gov. Neil Abercrombie, in his first State of the State address Monday, cited unfunded pension liabilities as a fiscal problem the state needs to address.

Hawaii has always enjoyed excellent credit ratings, allow its state and county governments to issue bonds with comparatively low interest rate paybacks. Standard & Poor's, Fitch and Moody's, the three major credit rating services, routinely credit Hawaii's economy is with stability and praise the money management policies of state and county governments.

A good bond rating can save millions of taxpayer dollars. If the credit rating should go lower, bond issuers would have to offer higher interest rate paybacks in order to sell them.

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