Debt Rating Unchanged, Income Tax Cut Plan Partially to Blame

• Joe Wertz
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  Joe Wertz was a reporter and managing editor for StateImpact Oklahoma from 2011-2019. He reported on energy and environment issues for national NPR audiences and other national outlets. He previously worked as a managing editor, assistant editor and staff reporter at several major Oklahoma newspapers and studied journalism at the University of Central Oklahoma.

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Gov. Mary Fallin cautioned against reading too much into Moody's decision.

Moody’s won’t lower Oklahoma’s cost of borrowing because of worries about the state’s financial future.

One of the New York bond rating agency’s concern: efforts to eliminate Oklahoma’s personal income tax.

Moody’s also worries about energy industry volatility and Oklahoma’s constitutional limit on raising taxes, which — under State Question 640 — can only be done by a vote of the people or a legislative super-majority.

Oklahoma’s rating will remain Aa2.

The Tulsa World’s Wayne Greene:

The decision’s immediate effect is that the cost of state borrowing through bond issues won’t get any cheaper, but on a political level it suggests that an objective financial analyst is wondering about the wisdom of state’s tax-cutting efforts.

Earlier this year, Gov. Fallin, Finance Secretary Preston Doerflinger and Bond Adivser Jim Joseph traveled to New York to ask the major bond rating agencies to improve Oklahoma’s bond rating, the World reports.

Moody’s was the only agency that agreed to a full investigation of the state’s financial situation because of the request, Joseph said, the World reports.

Fallin told the paper that Moody’s officials seemed more concerned with the Constitutional limits on raising taxes than the income tax elimination plan.