HONOLULU (HawaiiNewsNow) - Citing "volatile tourism" and a "minimal financial cushion," Fitch Ratings has cut the bond ratings of the State of Hawaii one notch to 'AA'.
The New York credit rating agency said Thursday it was revising its rating outlook for the state from "negative" to "stable," a sign it feels no further cut will be necessary.
"The downgrade," Fitch said, "reflects the state's minimal financial cushion against risks inherent in an economy dominated by the volatile tourism sector."
It said Hawaii's geographical location limits economic diversification. Fitch also cited the fact that public schools across the state are operated by the state government rather than localities. And it said the state has a substantial unfunded pension liability.
The service also said, however, that "financial management is sound," and noted with approval the quarterly revenue forecasting by the Council on Revenues.
"Though revenue underperformance has resulted in deficits in the last two fiscal years, the state has repeatedly taken prompt action toward budget balance," Fitch said.
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