Copyright © 2018 Albuquerque Journal
SANTA FE – Concerns over New Mexico’s pension liabilities and deeply rooted spending challenges prompted a national credit rating agency to downgrade the state’s bond rating on Monday – a blow to the state’s fiscal reputation and its second downgrade in two years.
Moody’s Investor Service noted in its announcement that the state’s cash reserves have been built back up after being depleted during a recent budget crunch but that the growing pension liabilities, a high Medicaid enrollment rate and other budget-related issues prompted the downgrade from an AA1 to an AA2 rating.
Although the credit rating agency set the state’s outlook as “stable,” the rating downgrade could lead to higher borrowing rates for infrastructure projects. It also represented Moody’s first rating change for a state this year.
“It’s not a surprise – disappointed, but not a surprise,” Sen. John Arthur Smith, a Deming Democrat and chairman of the influential Senate Finance Committee, said of the rating downgrade.