They also affirmed the Aa2 ratings on outstanding GO bonds and the Aa3 ratings on debt issued from the Mississippi Development Bank.
“The state's stable outlook, which applies to its GO as well as its appropriation debt, is supported by stabilization of revenue and economic trends and a resumption of deposits to the rainy day fund,” Moody’s wrote. “The outlook also incorporates the expected continuance of conservative fiscal management, which will help manage elevated debt levels and potential future revenue weakness.”
To see a future upgrade, Moody’s said Mississippi needs:
Pension liabilities are a major issue for the state, as they are for most states. A recent report from Truth In Accounting noted Mississippi’s unfunded retirement obligations. And because of the state’s debt burden of $8.3 billion, each taxpayer has a burden of $11,300.
In September, S&P Global Ratings similarly revised the state’s general obligation debt outlook from negative to stable.
“Now, all three of Mississippi’s credit ratings are strong and positive,” said Treasurer Lynn Fitch. “Taxpayers will benefit from recent efforts to meet economic challenges head-on, such as putting money back into the Rainy Day Fund and strengthening PERS’ funding policy. Better ratings mean the bond issuances currently in the works for capital and transportation improvements across the State will yield better deals for taxpayers.”
A depletion of financial reserves, economic underperformances, and persistent growth in retiree benefit liabilities could lead to a future downgrade.