The Washington budget has been placed in a straightjacket by the snake oil salesman from Mukilteo. Now, the budget stalemate is about to make things worse if not impossible in this Washington. If you haven’t been paying attention – peeps, you really need to tune in. For supporters of education, several education entities will be adversely impacted. Drew De Silva reports in the Seattle Times article, Debt Fight Could Hit UW, King County, Seattle Credit Ratings
For anyone who thought the wrangling over the U.S. deficit and debt ceiling in the “other Washington” didn’t have much to do with this one, credit-rating agency Moody’s had a stark rejoinder Thursday: Think again.
Moody’s warned that if there’s no budget deal and it cuts the federal government’s top-notch credit rating, the equally high ratings of King County, Seattle and Bellevue, the University of Washington and five local school districts would be placed under review for possible downgrade as well.
That at least raises the possibility that the next time the county or one of those other public entities goes to borrow money, it would have to pay a higher interest rate. All now have the highest rating of Aaa, which gives investors great confidence they will repay the debt on time and allows them to borrow money at the most attractive rates.
The UW, which according to Moody’s has $621.3 million in rated long-term debt outstanding, was the only Aaa-rated university among the 177 cities, counties, housing agencies and other public entities warned of a potential downgrade.
The agency cited the UW’s “unusually large share of revenues derived from federal research grants and Medicare and Medicaid reimbursements” — funds whose flow would be imperiled by a federal default or government shutdown.
In a statement of its ability to repay its bonds, the UW said it has “significant liquidity available to withstand short-term interruptions to its revenue streams….”
King County budget director Dwight Dively said the county was on solid fiscal ground and that he was confident it would be able to retain its Aaa rating even if the U.S. government didn’t.
“This has nothing to do with King County’s finances,” he said. “It has everything to do with the federal government’s inability to resolve the debt-ceiling issue.”
Dively said the county plans to issue more debt later this year.
Both Dively and Seattle budget director Beth Goldberg noted that Moody’s wouldn’t automatically downgrade any entity even if the federal government lost its top rating. Typically, a bond issuer facing possible downgrade has the opportunity to make its case.
“I would hope and believe that we’d be able to say to the ratings agencies, ‘Hey, we’ve had our problems here too, but decision-makers here are willing to make the hard decisions,’ ” Goldberg said.
Last November, the city cut about $67 million from its $897 million current-year budget, and it trimmed an additional $10 million in June. At the same time, Goldberg said, it added $750,000 to its rainy-day fund, and Mayor Mike McGinn plans to bolster the fund further as part of the 2012 budget.
“We are going to make a strong case that our actions demonstrate that we are worthy of retaining our triple-A rating,” Goldberg said.
The school districts cited by Moody’s are Seattle, Bellevue, Mercer Island, Issaquah and Lake Washington.
Moody’s said “high economic dependence on federal activity” and “exposure to capital markets disruptions” factored into which public entities went on the watch list.
Outstanding rated general-obligation and revenue-backed debt for the nine Washington state entities placed on Moody’s watch list:
City of Bellevue: $157.9 million
City of Seattle: $2.24 billion
King County: $2 billion
Seattle School District: $315.6 million
Mercer Island School District: $24 million
Bellevue School District: $482.6 million
Issaquah School District: $346.6 million
Lake Washington School District: $486.5 million
University of Washington: $621.3 million
Just how dire is the economic situation? The “Tooth Fairy Index” indicates we are in a heap of trouble.
The KING5 News story, Even the Tooth Fairy Is Pinching Pennies reports about the Tooth Fairy Poll
Cutting back on many things in this tough economy is a given, but now even the Tooth Fairy is feeling a bit cheap.
A recent Visa survey found that compared with last year, kids are getting an average of 40 cents less per fallen tooth. Nationwide, kids were used to getting $3 per tooth and are now only getting $2.60.
But to some children, that $2.60 would be an upgrade. The survey also revealed that 10 percent of kids find nothing under their pillows for the teeth they’ve lost.
According to the Tooth Fairy – duck.
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