Moody’s to Factor Pension Gaps in States’ Ratings

Posted on January 27, 2011. Filed under: Uncategorized |

Well, it seems fair that Moody’s Investor Services is starting to recalculate the states’ debts burden to take unfunded pension liability into account. Moody’s isn’t considering pensions as “soft” debt anymore, as it has in the past.

And it’s not really a surprise that this lands Connecticut right on top of the heap of problems. Yep, that’s right. We’re number one, the champions, and all that. But this is not an impressive place to be.

While Hawaii takes the crown for state debt as share of G.D.P. at 16.2%, with Connecticut in third with 15.9%, Connecticut takes the cake for state debt per capita.

Chart

New Jersey is fourth with $7,198. Massachusetts takes third with $7,872. Hawaii is second here, with $7,987. Not good, certainly, but in the same ballpark at least.

Connecticut’s state debt per capita is $9,366. That is not good at all.

The New York Times article points out that our normal neighbors at the top of all of these “doom-and-gloom” lists, California and New York, will actually do better with Moody’s new analysis because those states tend to make an effort to put more money toward pensions; Moody’s is only counting the unfunded pension liability.

It looks like our days of ignoring that big elephant in the room are coming to an end. That looming pension problem is going to affect us, sooner rather than later.

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