• Most U.S. state budgets have shown resiliency in the face of the COVID-19 pandemic though challenges remain for fiscal 2022 and beyond.
• Unprecedented federal aid has contributed to budget stability and the most recent stimulus package grants states additional flexibility to manage their budgets.
• Ability to use rainy-day reserves remains a crucial tool for budgetary management, especially for states with economic recovery that lags that of the nation.
• States must focus on long-term structural budget balance to preserve credit quality once federal aid tapers off.
It's been more than a year since the initial economic shock of the COVID-19 pandemic, and most state budgets have stabilized. In S&P Global Ratings' view, many states have shown resiliency as they have been able to keep their budgets afloat utilizing budgetary control mechanisms such as adjusting expenditures and using budgetary reserves built during the expansion following the Great Recession. Significant federal aid also played a major role in stabilizing state budgets by reducing some expenditure pressures and spurring economic activity that translated into better revenue collections.
We expect states' fiscal 2022 budgets will benefit from the continued rollout of vaccines and the ongoing upswing in the national economy. However, we believe long-term cost pressures that existed pre-pandemic continue to pose challenges for future budgets.
The Baseline Forecast Shows The U.S. Economy Back On Track For Growth As Fiscal 2022 Nears
In S&P Global Economics' baseline forecast, the U.S. economy will expand by 6.5% in 2021 before decelerating to 3.1% growth in 2022. (See "Economic Outlook U.S. Q2 2021: Let The Good Times Roll," published March 24, 2021, on RatingsDirect.)
The national economy is on the mend as vaccinations roll out and economic activity increases around the country. And with this, the clouds of uncertainty over state budgets for the past year have largely lifted. Most states' revenue forecasts have significantly improved from severe projections anticipated last summer and, for many, actual fiscal year-to-date revenue collections have reached (or nearly reached) pre-pandemic levels. Given pent-up consumer demand, we expect these positive revenue trends will continue to benefit state budgets in fiscal 2022. However, employment, generally considered to be a lagging indicator, could prove a weak point that weighs on an otherwise rapidly accelerating recovery.
Most Budgets Are In The Hands Of State Legislatures
For most states, the start of fiscal 2022 is nearly two months away. In a typical year at this point in the budget cycle, many budgets would already be enacted; however, most are currently being debated within legislatures. We believe the delays are evidence of improved conditions as the economy continues to heat up and states work to update their revenue forecasting. Furthermore, some states are waiting to obtain additional clarity on how they might use incoming federal aid.
Unprecedented Levels Of Federal Aid Have Boosted State Budgets
To combat economic shockwaves brought on by the COVID-19 pandemic, the federal government has directed historic levels of aid to state and local governments. State budgets have benefit from this deployment on two fronts--direct support has lessened the burden on budgets to fund certain expenses and indirect support has kept states' major revenue streams afloat. Specifically, direct support has come from appropriations earmarked for certain pandemic-related expenses (such as for personal protective equipment and sanitation needs) while indirect support has resulted from expanded unemployment benefits and stimulus checks supporting state personal income tax and state sales tax collections, respectively.
We expect the federal government's latest aid package, the American Rescue Plan (ARP), will provide states with significant additional funding and increased flexibility to address budgetary needs. We understand the aid, which must be spent by the end of calendar 2024 (about halfway through fiscal 2025 for most states), may be used broadly including to replace budgeted revenue that couldn't be collected due to the pandemic, spur economic activity, and improve essential infrastructure. While the funds may not be used to reduce state-level taxes or pay down pensions, we believe a state's approach to spending the stimulus money could have implications for future structural budget alignment. For more on the impact of the ARP, see "Across U.S. Public Finance, All Sectors Stand To Benefit From The American Rescue Plan," published March 18, 2021.
In S&P Global Ratings' conversations with state officials, many have indicated they are waiting for additional guidance on specifically how states may use ARP funds before they draft plans to disburse the aid. Although the funds may be spent during the next few years, we believe it's likely many states will choose to weight their spending upfront as employment recovery ramp ups more slowly than other economic measures.
Rainy-Day Reserves Remain Crucial For Budgetary Balance
During the economic expansion that preceded the pandemic, most states prioritized building reserves to prepare for a potential downturn. Based on National Association of State Budget Officers (NASBO) data, median state rainy-day fund reserves grew threefold to about 8.0% of expenditures from 2009 to 2020. As economic conditions worsened during the pandemic, many states turned to their reserve funds for budgetary stability. According to NASBO, 30 states report decreased total balances (including general fund ending balances and rainy-day fund balances) from fiscal 2019 to fiscal 2021 (enacted). Specifically, the decreases amounted to a $33.3 billion decline, with $12.2 billion (over one-third) from declines in rainy-day fund balances.
We generally expect a state's financial management and budgetary flexibility will dictate much about its resilience to stress when the economy softens and we believe the pandemic emphasizes this view. We expect that reserves will remain critical to states' budgetary flexibility, especially for states that are on track for a longer road to economic recovery.
We note that oil- and gas-dependent states, which typically hold outsized budget reserves as a cushion against lower oil prices, have contended with both a sharp drop in oil prices within the past year and the pandemic. Use of budgetary reserves has been mixed among these states and we expect their recovery might lag that of peers even as economic momentum builds. For an update on oil- and gas-dependent states, please see "U.S. Oil And Gas-Dependent States Are Out Of The Woods (For Now)," published April 15, 2021.
Although The Dust Has Begun To Settle, Long-Term Challenges Remain
State governments have used a variety of tools to keep their budgets afloat in the past year. Beyond federal support, states have produced updated economic and revenue forecasting, reduced expenditures, and utilized reserves funds. In fiscal 2022, we expect states with strong economic growth projections will face fewer budgetary hurdles compared with pre-pandemic budget patterns, while states that expect recovery over a longer-than-average time horizon will rely more heavily on federal funding, putting them at greater risk for structural deficits.
As the dust settles and budgetary conditions normalize, state governments must refocus on the long-term challenges that were put on the backburner to address pandemic-induced public health challenges. We believe these pressures, including escalating unfunded retirement liabilities and high fixed costs, limit budgetary flexibility in the long term and suppress a state's ability to respond to significant economic shocks.
State Budget Roundup
Alabama's legislature is considering the $2.47 billion state general fund (SGF) and $7.67 billion education trust fund (ETF) budgets, representing approximately $536 million in new spending for the fiscal year beginning Oct. 1, 2021. If signed into law, the SGF and ETF would see 3.4% and 6.3% increases, respectively, over the current fiscal year and each would be the largest in the state's history. The ETF budget includes funding for a 2% across-the-board base salary increase for public education employees, a 2% step raises for all teachers, and STEM-related teacher recruitment. In addition, the Alabama Senate approved a constitutional amendment and other enabling legislation that would establish a state lottery and allow for up to nine casinos in the state, although the proposal would still require passage by Alabama's House of Representatives and be subject to a voter referendum. The SGF year-end fiscal (Sept. 30) 2020, reserve of about $212 million represents 9.7% of budgeted SGF expenditures, while its estimated year-end combined ETF reserve and budget stabilization fund (BSF) balance of $756 million is approximately 9.5% of ETF expenditures. Alabama expects to maintain at least stable reserves in each fund for the current and next fiscal year.
The governor's fiscal 2022 amended budget proposal shows an improved revenue outlook as oil prices increased over the past year but significant risks remain. The Office of Management and Budget's fiscal summary estimates an unrestricted general fund (UGF) deficit of $863 million or 19% for fiscal 2021 closed with use of the state's constitutional budget reserve. The proposed fiscal 2022 budget shows an $40 million deficit or 1% of UGF expenditures, but also incorporates a 6% reduction in UGF expenditures. Petroleum-related revenues are estimated at only 19% of fiscal 2022 UGF revenue compared with nearly a decade ago when they were 100% of revenues. The budget includes full payment of the statutory dividend to residents with a $3.1 billion draw from the earnings reserve account or 72% of UGF revenue. In the long term, the state continues to grapple with sustainable budgeting. While total reserves remain very strong (over 200% of expenditures), additional revenue sources will be needed in future years as expenditure reductions, in our opinion, have been virtually exhausted over the past several years. The governor's plan recognizes a need for new revenues in fiscal 2023, but it is unclear what that might entail. Alaska does not levy a statewide sales or income tax at present.
The state ended fiscal 2020 with a general fund balance of $372 million and a BSF balance of $970 million, for a combined balance equal to about 12.5% of ongoing expenditures, a level we consider strong. The governor's budget proposal for fiscal 2022, released in January 2021, forecasts that the fiscal 2021 year-end general fund balance will rise to $1.174 billion, which, combined with the BSF, would result in reserves equal to a very strong 18.8% of ongoing expenditures. The governor's proposal for fiscal 2022, including changes in baseline revenues and new executive initiatives, would have a structural surplus, but bring the general fund balance down to $921 million, or a still-strong 15.5% of ongoing expenditures when combined with the BSF. Arizona estimates ongoing spending will rise 6.8% in fiscal 2021 and the governor's fiscal 2022 budget proposal would raise spending by 6.9% in fiscal 2022.
The governor's general fund budget recommendation for the fiscal 2021-2023 biennium anticipates adjusted available revenue of $5.848 billion (or a 2.8% annual increase) for fiscal 2022 and $6.071 billion (or a 3.8% increase) for fiscal 2023, which we view as reasonable based on the state's November 2020 revenue forecast. The biennial budget recommendation includes several measures to build Arkansas' long-term reserve fund to approximately $420 million by the end of the biennium, including transfers, unobligated balances, and an additional transfer from the general revenue allotment reserve fund over the biennium. At June 30, 2020, the state had approximately $185 million in its long-term reserve fund–-Arkansas' primary reserve account-–or nearly 3.2% of combined operating fund expenditures. Following the fiscal year, Arkansas transferred $25 million from its property tax relief fund to the long-term reserve, bringing the current balance to approximately $210 million, or 3.6% of combined operating fund expenditures.
The governor's executive budget proposal for fiscal 2022 estimates fiscal 2021 revenues will come in well ahead of budget, in part due to strong capital gains taxes and the state's highly progressive income tax rates, leaving combined budget stabilization account and general fund reserves equal to a very strong 14.1% of estimated expenditures. The governor's proposed budget would still leave combined reserves at fiscal year-end 2022 at a very strong 13.3% of expenditures. However, this does not take into account additional current-year state stimulus spending enacted after the governor's budget proposal was released, which is likely to be more than offset by new federal aid that California will receive in the most recent federal aid bill, plus above-forecast monthly revenues that have come in since the governor's proposal was released. A revised revenue forecast will be incorporated into the governor's upcoming May revision to his 2022 budget proposal, with legislative passage of an actual adopted budget not expected until June.
Colorado's two houses of the legislature have each passed their own version of the 2022 budget, which will be reconciled in a conference session. The governor's earlier budget proposal for fiscal 2022 estimates fiscal 2020 ended with a general fund balance equal to a very strong 15.4% of appropriations, due to much higher-than-budgeted revenue, and the balance will rise to 19.9% of appropriations at fiscal year-end 2021, again due to higher-than-originally-budgeted revenue. The state legislative council estimates fiscal 2021 will end with an even stronger 30.7% balance. The governor's executive budget proposal projects the general fund balance would rise to 21.8% at fiscal year-end 2022 under his proposals, and fall to 7.3% in 2023, when revenues would rise to the point where they would be slightly over the state's constitutional revenue growth cap.
The governor's proposed fiscal 2022-2023 biennial general fund budget totals $20.5 billion and $21.1 billion, respectively, a 2.2% and 3.0% increase, over the fiscal 2020-2021 biennial year, respectively. Connecticut continues to exercise strong budgeting practices based on statutory changes that include a cap limiting revenue assumptions (99.0% in 2022 and 98.7% in 2023) and a volatility cap requiring a transfer to its budget reserve fund (BRF) or rainy-day fund. Absent the receipt of federal aid, the state was estimating to use $775 million in fiscal 2022 and $975 million in fiscal 2023 from its reserves. However, even with the use of $775 million from the BRF in fiscal 2022, the state estimates it would still have reserves of 13.4% of its general fund budget going into fiscal 2023. Connecticut is also considering how to stabilize its special transportation fund. The governor previously proposed tolls that failed to achieve legislative support and is now proposing a "highway use" revenue source based on the weight of the vehicle and number of miles driven.
The governor presented a $4.7 billion fiscal 2022 general fund budget, up 3.5% over the adopted fiscal 2021 budget. The fiscal 2022 proposal appropriates about 96% of Delaware Economic and Financial Advisory Council (DEFAC)-determined available revenues, below the 98% DEFAC guidance. Reserves continue to grow, with the proposed budget continuing to fully fund the rainy-day fund at 5.2% of general fund operating expenditure, and sets aside more than $131 million, or another 2.8% in the BSF. The latest projections show slightly increased revenues for fiscal 2022 at 3.1% higher than previously forecast. The forecast for fiscal 2023 was also increased slightly, with revenues now forecast to rise 0.8% over fiscal 2022 projected revenues. The current proposal also does not include any money the state might receive--and Delaware is expecting to receive more than $900 million, or 19%, of the fiscal 2022 budget proposal.
The Florida Legislature adopted a 2021 budget totaling $93.2 billion ($35.2 billion general fund), a modest 2.4% more than the 2020 fiscal year budget. Following the revision by the state's Consensus Revenue Estimating Conference in early April, general revenues are forecast to increase 8% by the end of fiscal 2021 compared with fiscal 2020. Fiscal 2022 general revenues are now forecast to increase to $34.9 billion or 2.6% relative to 2021. The governor's "Florida Leads" recommended budget for fiscal 2022 totals $35.8 billion for the general revenue portion and $96.6 billion in all funds. The state's combined general revenue and BSF reserves stood at $2.4 billion, or 7.6% of recurring expenditures in fiscal 2020, and Florida has no plans to tap its $1.7 billion BSF in fiscal 2021. The legislature continues developing its fiscal 2022 budget.
The state legislature approved a $23.3 billion fiscal 2022 general fund budget in line with spending priorities outlined in the governor's proposal. At the end of fiscal 2020, the revenue shortfall reserve (RSR) totaled $2.7 billion or about 11.5% of estimated fiscal 2022 general fund expenditures. Georgia does not explicitly budget for additional contributions to the RSR and does not issue projections for future balances but has a history of adding available surplus to the account. The governor's proposal included additional bonding authority for the state's transportation network and increased kindergarten to grade 12 (K-12) funding that had been reduced as part of the prior year's enacted budget.
The state's proposed biennium general fund budget totals approximately $8 billion in fiscal years 2022 and 2023, which represents a decrease of 4.5% in the first year and 3.1% in the second year over fiscal 2021 appropriation levels. Increases in nondiscretionary spending are offset by other programmatic reductions and suspending Hawaii's prefunding of its other postemployment benefit obligation. The state has taken a multipronged approach to address its revenue shortfalls since the pandemic began, including issuing $750 million of working capital bonds, use of reserves, and expenditure reductions. At the end of fiscal 2022, the state estimates its emergency and budget reserve fund balance will be $68.3 million or 0.88% of estimated fiscal 2022 expenditures. While receipt of additional federal aid should aid budget stability, long-term balance remains a key credit consideration.
Nine months into fiscal 2021, Idaho general fund revenues are up 9.3% relative compared with forecast, or $264.63 million. However, due to a shift in the filing deadline for income taxes to May from April, individual income tax collections will likely be down in April relative to their estimate but should not necessarily have a meaningful effect by the fiscal year-end in June, given the state's relatively strong performance fiscal year to date. Before the pandemic, the state's BSF was estimated to end fiscal 2020 at $373.19 million, or 9.5% of appropriations. Idaho's current budget is balanced without the use of reserves, which collectively totaled 12% of ongoing appropriations. The governor's proposed budget was marginally larger (3.8%) than 2021 and balanced without the use of reserves.
The governor's $41.7 billion general fund fiscal 2022 budget remains with the General Assembly, but we expect a similar-sized operationally balanced budget to be passed by the end of May. The proposal is slightly smaller than the initial $42 billion budget fiscal 2021 proposed last year before the pandemic began, and $1.8 billion or 4.2% less than the estimated final spend in fiscal 2021. The introduced budget is designed to generate a $120 million surplus, although Illinois remains with effectively no funds in the BSF. Although the state's proposed fiscal 2022 general fund budget is slightly smaller than the previous year's proposal, and balanced in terms of current-year obligations, we do not view it as structurally balanced due to the treatment of pension obligations. General fund pension contributions of $9.4 billion are budgeted to fully meet increasing statutorily set amounts but are still less than actuarially determined amounts. We view the difference between the statutorily set contribution amounts and our defined minimum funding progress as a structural gap, and that a pension-related structural gap is expected to hold steady over the next few years at 10%-12%. The governor's February fiscal 2022 budget proposal does not include any of the expected $7.5 billion from the ARP, but state leaders called for repaying $2.5 billion in municipal liquidity facility loans as the preferred first usage.
In early April, Indiana's revenue forecast, presented to the state budget committee, revised upward current fiscal and next biennium revenues, providing some good news on favorable improvements to the outlook. Current-year general revenue is forecast to increase 6.4% by fiscal year-end 2021 and by 4.5% in fiscal 2022. The adopted biennial budget estimates structural surplus in each of the two fiscal years of the state's biennium (2022-2023) and totals $37.4 billion. While not anticipated, with the governor's approval, the state budget director can withhold allotments of appropriations to agencies if revenues are less than anticipated to prevent a deficit. Budget adjustments have historically been implemented regularly and on a time.
The governor's general fund budget proposal for the fiscal 2022-2023 biennium totals $16.4 billion. Iowa's spending priorities include education funding and universal broadband access. The proposal also removes triggers related to income tax reduction passed in 2018 to ensure planned income tax rate reductions occur in 2023. The budget fully funds the cash reserve fund and the economic emergency fund at 7.5% and 2.5% of annual adjusted revenues, respectively, which we consider strong. Excess reserves are used to reach an ending general fund balance in fiscal 2022 of $340.9 million (4.2% of net appropriations) and in fiscal 2023 of $421 million (5.1% of net appropriations).
The governor proposed a fiscal 2022 budget that projects a general fund ending balance of approximately $600.9 million or 7.5% of expenditures matching the statutory ending balance requirement. Total receipts in fiscal 2022 are projected to be approximately $7.8 billion and similar to the previous year. Among the spending proposals the budget continues to fund education to comply with the state's base aid requirements, restoring prior expenditure cuts to higher education, and other investments in various programs. In addition, the budget proposes extending the amortization of unfunded pension liabilities by 10 years for budgetary savings. We note that some proposals in the governor's budget, including proposed pension changes, have been rejected by the Kansas Legislature in the past.
Kentucky enacted its fiscal 2022 budget, with expenditures relatively flat and continuing to fund its full actuarially determined contribution for the teachers' and state employees' public pension plans. This is the second half of the state's biennium spending plan as it only adopted a one-year budget last legislative session. Due to an unexpected surplus from 2020, Kentucky's budgetary reserve balance is projected to increase in 2021 and bring the balance to approximately 4% of revenues, with additional direct appropriations expected in fiscal 2022. In addition, the state directed additional resources toward clean drinking water, school construction, and expanding broadband access.
Louisiana's legislative session convened on April 12, 2021, and the legislature will develop the state's fiscal 2022 budget. The governor's executive budget for fiscal 2022, as presented, is effectively flat from fiscal 2021. The state's Revenue Estimating Conference (REC) adopted a conservative estimate for the next fiscal year (2022) of $9.57 billion in general fund (direct) funds available, a 2.3% reduction from its previous estimate for the fiscal year. At the same time, the REC revised current-year estimates up 3.2% because revenue trends have been slightly stronger than anticipated. In our view, the adoption of a slightly more conservative estimate, which will be used to guide Louisiana's next budget, reflects a prudent approach given lingering pressures from the pandemic. Reserves are estimated at $503 million, or 5.4% of general fund appropriations by the end of the current fiscal year.
On March 31, 2021, the governor signed into law Maine's current services budget for the fiscal 2022-2023 biennium. At the time the budget was enacted, officials noted that a supplemental biennium budget will be introduced following release of updated revenue projections and receipt of additional guidance regarding spending funds from the ARP. The Maine Consensus Economic Forecasting Commission indicates its April 1, 2021, report incorporates less uncertainty than its previous November 2020 forecast due in part to additional federal stimulus, vaccine rollout, and opportunities for increased immigration. An updated revenue forecast committee meeting was held the afternoon of April 27, 2021, and the legislature is expected to convene a special session on April 28. Maine reports that the BSF balance is currently $259.4 million, or 6.6% of enacted annual general fund expenditures, which we consider good. Officials note the supplemental budget for fiscal 2021 directs another $8 million to the BSF.
The governor's fiscal 2022 budget proposal is balanced without the anticipation of unrestricted federal aid or reserve use. At fiscal year-end, the budget estimates $1.18 billion of cash resources (6.0% of general fund revenue), including $990 million in the revenue stabilization account. It fully funds all K-12 education mandates and includes $213 million in "hold harmless" funding so every jurisdiction receives more funding than the previous year. However, the state faces continued pressures from rising costs. The fiscal 2022 budget year is the third in a 10-year phase-in of the Kirwan Education Commission's recommendations, "Blueprint for Maryland's Future," to improve public education. Initial funding for the plan included dedicated video lottery terminal revenue and the establishment of an Education Trust Fund Lockbox, but significant outyear gaps remain. Initial funding of the plan includes $255 million in fiscal 2020, $389 million in fiscal 2021, and the governor's proposed $554 million in fiscal 2022.
In recent years, Massachusetts has enacted its budget after the July 1, start of its fiscal year, using short interim budgets until a final budget is enacted. Fiscal 2020 ended with a $3.5 billion BSF balance equal to a strong 7.6% of expenditures and other uses. Revenues are running ahead of budget so far in fiscal 2021, with fiscal-year tax collections through March 2021 up 7.2% over the same period the year before, and 6.9% above the state's updated January 2021 forecast used for the governor's fiscal 2022 budget proposal-- which itself was 2.5% above the original 2021 budget forecast. The governor's fiscal 2022 executive budget proposal projects the BSF will fall to $2.5 billion, or a good 5.3% of expenditures at fiscal year-end 2021 due to increasing expenditures, and proposes a further $1.1 billion draw or 2.4% at fiscal year-end 2022, but this does not include $3.4 billion additional direct federal support from the ARP, which was approved after the executive budget proposal was released.
In fiscal 2020, Michigan withdrew $350 million from its BSF to meet pandemic-related declines in revenue, leaving a BSF of $829 million, or what we view as an adequate 3.5% of combined general fund/general purpose (GF/GP) and school aid fund (SAF) expenditures at fiscal year-end Sept. 30, 2020. The governor has proposed a $175 million deposit to the BSF in fiscal 2021, which would bring the BSF to $1.059 billion, or 4.1% of combined GF/GP and SAF expenditures, including the governor's fiscal 2021 supplemental appropriations request. The fiscal 2022 executive budget proposal projects a BSF of $1.080 billion, or 4.1% of proposed fiscal 2022 GF/GP plus SAF expenditures at fiscal year-end 2022. The most recent state revenue forecast was made in January 2021, forecasting improved revenue, but did not include $5.7 billion of flexible federal aid for fiscal recovery included in the recent federal American Rescue Plan (ARP) Act.
The Minnesota governor's revised 2022-2023 biennial budget proposal includes total general fund spending of $52.3 billion, a 9.4% increase over 2020-2021 biennium spending projections. The proposal includes a $673 million increase in revenues; a $1.6 billion increase in spending; restoration of the state's combined budget reserve, cash flow, and stadium reserve accounts to $2.8 billion (5.3% of proposed biennial expenditures); and an unallocated $153 million ending fund balance. Expenditures exceed revenues by $677 million (1.3%), but the budget is balanced by the state's significant carryforward balance, currently forecast to be $3.8 billion (8.0% of biennial expenditures), inclusive of reserve accounts. The governor is proposing about $1.6 billion of new revenues: a fifth-tier income tax bracket ($433 million), an increased capital gains tax ($543 million), an increased corporate franchise tax ($330 million), and a tax on foreign income ($333 million). The new revenues are offset by $1 billion of tax cuts for mid-to-low income families and small businesses. Increased spending is mostly directed toward K-12 education, which would receive 1.0% and 2.5% increases the basic education formula in 2022 and 2023, respectively. Minnesota has a politically divided state legislature, and the State Senate Republican's budget proposal does not include any increase in taxes.
In November 2020, Mississippi's governor released his executive budget recommendation for fiscal 2022, including a general fund budget spending plan totaling $5.75 billion. The budget proposal factors in a 2% statutory set aside of $115.1 million of projected general fund revenues. In our view, the fiscal 2022 general fund recommendation called for modest year-over-year expenditure increases of $63.6 million (or 1.1% expenditure growth above the fiscal 2021 budget). The Joint Legislative Budget Committee recommendation largely conforms to the revenue estimates and appropriation recommendations. The governor's budget recommendation included a proposal to begin a multiyear phase out and elimination of the state income tax by 2030. Mississippi's income tax accounted for $1.96 billion, or 31.3%, of state-only general fund revenue in fiscal 2020. In March 2021, the state approved a nearly $6 billion general fund spending plan that struck down the income tax phase-out proposal and includes a 4% increase in the education budget that will increase teacher pay. As of Dec. 31, 2020, Mississippi reports that working cash stabilization fund reserves are $541.1 million, or 9.5% of fiscal 2021 budgeted expenditures.
Missouri's governor released his executive budget recommendation for fiscal 2022, including a general revenue fund budget spending plan totaling $10.59 billion, or a 5.8% increase in operating appropriations over the previous fiscal year. Removing the deferral of income tax payments from the previous fiscal year, revenue is expected to increase by an estimated 3.9% in fiscal 2022 relative to the current fiscal year, which we view as reasonable relative to historical year-over-year growth. The recommendation also includes approximately $208 million in new state-only funding for its share of expanding Missouri's Medicaid coverage (following a voter-approved ballot measure on Aug. 4, 2020). The state expects to fund the Medicaid costs through department efficiency savings, other program adjustments, and state general fund appropriations. Missouri's budget reserve fund (BRF) balance totaled $603.3 million, or approximately 6.7% of general fund revenue (net of refunds) as of Feb. 28, 2021. The governor's budget recommendation does not include a projection of the state's year-end fiscal 2021 and fiscal 2022 balance in the BRF, but we understand that the state does not expect to appropriate BRF reserves to balance operations.
Montana's executive budget has proposed income tax cuts and slightly lower spending and reserve levels for the fiscal 2022-2023 biennium compared with the current biennium. The budget proposal targeted $357 million in fiscal 2022 year-end reserves, or 13.8% of budget. Montana's budget is primarily funded through individual income tax revenue, historically over 50% of general fund revenues. Actual total cumulative general fund collections through March 2021 are tracking ahead of the original forecast and the previous year. In March 2021, the legislative fiscal division's revenue forecast update reflected $350 million more general fund revenue across fiscal 2021 to fiscal 2023 than the original official revenue estimate, based primarily on higher projected individual income tax receipts. The state budget derives only 1%-2% of revenues from direct oil and gas-related receipts; however, high-paying jobs in the oil and gas industry still produce meaningful economic effects and indirectly impact general revenue. The legislative budget bills, which also include tax cut proposals, are currently in conference committee. Separate bills related to allocation of the ARP federal funding are also being debated in the legislature.
In April 2021, Nebraska's legislature passed and the governor signed a biennial budget bill (with no vetoes), with total appropriations of $4.78 million for fiscal 2022 and $4.94 billion for fiscal 2023, or a 1.7% average annual increase. The now-enacted budget provides $206 million for other legislative priorities, while increasing health and human services, corrections, and school aid appropriations. The enacted budget also increases direct property tax relief to a total of $1.45 billion over the biennium. It also projects reserves (including the state's cash reserve fund) totaling $1.3 billion, or 27.3% of net general fund appropriations at the end of the current biennium, and $1.26 billion, or 25.6% of net general fund appropriations at the end the fiscal 2022-2023 biennium.
The pandemic significantly disrupted Nevada's tourism-dependent economy and revenue resulting in draws on rainy-day balances and significant cuts to state spending to address a total budget gap exceeding 20% of biennium appropriations. Fiscal 2020 general fund revenue fell almost 5% compared with fiscal 2019 and Medicaid caseloads rose 18.7% into fiscal 2021 compared with original budget projections in 2019. The 2021-2023 biennium executive budget proposes 2% less spending when compared with the 2019-2021 legislatively approved biennium budget but restores spending to 5% above current adjusted biennium budget levels, incorporating an additional assumed 2.2% increase in Medicaid caseloads. The December 2020 revenue forecast for the 2021-2023 biennium projects another 1.6% year-over-year decline in fiscal 2021 general fund revenue before 2.6% estimated annual growth in fiscal 2022. The budget proposal plans for general fund balances above the required 5% levels in each year of the biennium as well as rainy-day fund use and transfers of $85 million for a combined rainy-day and unappropriated balance of about 7.5% of the annualized budget by the end of fiscal 2023. Although the governor's budget had not proposed tax increases, legislative bills included proposed changes to mining, sales, and gaming taxes. The federal ARP Act, which passed after the release of the state's executive budget, allotted $2.9 billion of direct aid to Nevada and is likely to factor into ongoing legislative budget deliberations.
New Hampshire's combined general and education fund budget recommendation for the fiscal 2021-2023 biennium estimates net appropriations of $2.71 billion (or a 0.4% annual decrease) for fiscal 2022 and $2.74 billion (or a 1.2% increase) for fiscal 2023. The state expects education and general government spending categories could see level funding or modest decreases given a proposal to reorganize some state agencies, and the expiration of one-time appropriations at the end of the current biennium. In addition, combined unrestricted general and education fund revenue is estimated to increase by a modest 1.4% and 1.6%, respectively, in fiscal years 2022 and 2023. The recommended budget also proposes several tax policy changes, which in aggregate, New Hampshire's Department of Revenue Administration estimates would decrease revenue in the general and education funds by $52.5 million over the next biennium. The state projects a draw from its rainy-day fund balance to help close the budgetary gap in the fiscal 2020-2021 biennium, but the governor's proposal projects New Hampshire's rainy-day reserve balances to remain steady at $85.7 million, or approximately 3.1% through the end of the fiscal 2022-2023 biennium.
The state sold $3.6 billion of deficit bonds in fiscal 2021 to balance its budget, producing $4.3 billion of net proceeds. However, improved revenue forecasts since the 2021 budget was enacted indicate that the deficit bonds might not have been needed, with an estimated draw on the fund balance of only 0.4% of appropriations without them. The sale of the deficit bonds has boosted estimated fiscal year-end 2021 operating fund balances to $6.3 billion, or a very strong 15.4% of appropriations. The governor has proposed a large fund balance drawdown in fiscal 2022 equal to 9.3% of proposed 2022 appropriations, leaving an adequate ending fiscal 2022 fund balance of 4.9%. We view the large fund balance drawdown as indicative of a substantial structural deficit, in part due to a 7.2% increase in appropriations in fiscal 2021 and a proposed 8.8% increase in 2022, mostly to bring annual pension contributions up to full actuarially determined contribution, but also to increase funding for schools, provide free community college tuition for families with incomes under $65,000, and income tax rebates to middleclass taxpayers, among ongoing spending. We expect a new state revenue forecast to be released in May, with a final adopted budget in June.
About one-third of New Mexico's general fund revenue derives from oil and gas production; about half from direct severance taxes and mineral rents and royalties deposited in the general fund; and about half indirectly from gross receipts taxes on oil and gas activity. New Mexico's midsession consensus revenue update reflects an unaudited ending balance of $1.56 billion, or 21.7% of recurring appropriations for fiscal 2021 and $1.76 billion, or 23.6% of ongoing appropriations in 2022. However, a new risk that the state has assessed involves potential changes in federal policy that curtail or materially alter production operations on federal land. The Consensus Revenue Estimating Group considered two scenarios resulting from federal policy changes that would lead to 10% and 20% production declines, respectively. The fiscal 2022 general fund recurring budget increased by 3.2%.
New York's enacted state budget totals $111 billion among state operating funds. The budget differs from the governor's proposal (see, "New York State’s 2022 Executive Budget Proposal Relies On New Revenues And Federal Aid To Close Its Gap," Feb. 3, 2021) based on anticipation of federal aid. While receipt of federal aid will stabilize budgetary performance in the near term, the state's ability to achieve structural balance as available aid wanes is a key credit consideration. On a nominal basis, available reserves (rainy-day and economic uncertainties) are expected to remain at the same level in fiscal 2022. New York has not drawn on reserves to manage fiscal stress brought about by the pandemic. In addition, the state legalized recreational cannabis, approved sports betting, and increased taxes on high-income earners to support its financial plan.
The governor's proposed fiscal 2021-2023-biennium budget totals $27.3 billion and $28.7 billion in the general fund expenditures each respective year. Most of the budget is applied toward education (59% of appropriations) followed by health and human services (22% of appropriations). The proposal includes Medicaid expansion, but it is unclear if this effort will gain traction as previous attempts to expand coverage have been opposed by the legislature. Under the plan, North Carolina's current savings reserve balance of $1.1 billion (4.5% of fiscal 2021 expenditures) would be doubled to reach a $2.2 billion balance (8.0% of proposed fiscal 2022 expenditures).
The state legislature is currently working on North Dakota's next biennial budget ending fiscal 2023. As proposed, the executive budget decreases ongoing general funding by a little over 1.2% equal to the projected slide in general fund revenue. However, relative to the January 2021 legislative estimate for general revenues, the next biennium's revenues are forecast to be slightly up 1.4% and slightly more than 2.0% compared with the biennium ending fiscal 2021. Favorable reserves (including general, budgetary stabilization, and strategic investments and improvements funds) are forecast to total more than 35% of appropriations by the end of the current biennium. The legislature continues to develop the next budget.
On Feb. 1, 2021, Ohio's governor released a balanced executive budget recommendation for the fiscal 2021-2023 biennium, including a general fund agency appropriations plan totaling $35.4 billion for fiscal 2022 and $39.3 billion for fiscal 2023. The recommendation includes a year-over-year expenditure increase of $1.1 billion (or 3.5% above the current year budget estimate) for fiscal 2022, and a $3.9 billion spending increase (or 11% above the proposed fiscal 2022 budget) for fiscal 2023. At the same time, the executive budget recommendation conservatively forecasts tax revenue growth of approximately 2.0% for 2022 and 3.4% for 2023. Increased spending is primarily directed toward Medicaid expenditures, increased funding to state agencies and local aid, and more than $1 billion of one-time "surge" funding in fiscal 2022 to make investments that aid the state's recovery. Ohio maintains a BSF balance of $2.691 billion (or approximately 8% of general revenue fund expenditures). Although the budget recommendation does not project the ending BSF balance for the current or next biennium, we understand that Ohio does not expect to appropriate BSF reserves to balance operations to end the current biennium or supplement the 2022-2023 biennium budget.
Oklahoma's governor released his executive budget recommendation for fiscal 2022 on Feb. 1, 2021, including a total expenditure authority of $8.46 billion, or a $631 million increase relative to the current year's budget. The state's Board of Equalization revised its February 2021 general fund appropriation authority upward to $6.45 billion (equal to 95% of certified general revenues) for fiscal 2022, indicating better-than-expected general revenue conditions. The recommendation includes a deposit of $200 million into the cash flow reserve fund and $300 million deposited in the revenue stabilization fund (RSF) to begin rebuilding reserves from those drawn in the previous fiscal year. Oklahoma's combined balances are currently $229.9 million, or approximately 3% of general fund expenditures. If enacted, the recommended deposit into the RSF would restore combined reserve levels to approximately 8% of proposed general fund expenditures in fiscal 2022. The proposal also includes approximately $164 million in new spending to cover the state-only share of Medicaid expansion, beginning July 1, 2021. We believe the governor and legislature are likely to identify funding that can absorb Medicaid cost increases in the fiscal 2022 budget.
The governor's recommended budget for the fiscal 2021-2023 biennium, released on Dec. 1, 2020, totals approximately $25.6 billion for the combined general fund and lottery funds. This represents a $1.5 billion (6.2%) increase compared with the current biennium. The majority of this growth stems from a nearly $1.1 billion (16.2%) increase in human services, which aligns with the governor's plan to scale up support for existing state health programs and incorporates increases in federal aid. The proposal's largest appropriation categories support K-12 education (46% of the budget), human services (30%), and public safety/judicial (15%). Key spending priorities include $317 million for affordable housing and $252 million for wildfire recovery and mitigation efforts. At the end of the biennium, the budget anticipates a general fund balance of $243.3 million or a modest 1.0% of combined general fund and lottery funds expenditures.
The governor's proposed general fund budget for fiscal 2022 totals $37.8 billion, representing a sizable, in our view, 11.1% increase in spending over the current fiscal year. The increase is supported in part by modifications to personal and corporate income taxes that, if passed, are projected to generate $3.17 billion (or about 8.3% of the budget's total general fund revenues) in fiscal 2022. These modifications include increasing the personal income tax rate while expending certain tax credits and lowering the corporate net income tax while closing loopholes. In prior budget cycles, similar modifications were proposed but did not pass the legislature. Other initiatives included are increasing basic education funding, raising the minimum wage, and legalizing adult use of cannabis. The budget calls for a $97.8 million deposit to the rainy day-fund, which we understand would bring the balance to $340.8 million or 0.9% of proposed general fund expenditures. Although we would consider this balance to be minimal, we would view progress toward rebuilding reserves withdrawn in fiscal 2021 as a positive credit factor.
On March 11, 2021, Rhode Island's governor released his fiscal 2022 budget recommendation, including a general revenue fund budget spending plan totaling $4.37 billion, a $218 million increase (or 5%) in operating appropriations compared with the fiscal 2021 enacted budget. The state also projects a $228.6 million, or 5.5% increase in net general revenue compared to the revised fiscal 2021 budget. The proposal identifies a combination of federal and state gap-closing measures to balance the $336 million estimated structural deficit (or 7.7% of recommended appropriations). The recommendation does appropriate reserves to balance operations in the fiscal 2022 budget, and the state estimates a year-end fiscal 2022 balance in the budget reserve and cash stabilization account totaling $225.6 million, or 5.3% of general revenues. If improved current fiscal year (2021) forecast revenue and budget projections hold, the state estimates a year-end budget reserve balance will reach $207.8 million, or 5.2% of general revenues.
South Carolina's executive budget proposal for fiscal 2022 includes a phased 1% reduction in income tax rates over five years if overall general fund revenue rises by 5%, dedicates some funding for annual teacher pay raises, and proposes using all of the $176 million in the capital reserve for higher education deferred maintenance projects. The proposal also directs an additional $500 million to the rainy-day reserve fund for an ending combined projected balance exceeding $1 billion, or a strong 11% of budget compared with less than 7% budgeted in fiscal 2021. Since the executive budget was released, fiscal 2021 cumulative general fund revenue collections through March 2021 have trended favorably and are up 8.5% year to date compared with the previous year. Given these trends, the Board of Economic Advisors (BEA) revised its baseline general revenue forecast in April 2021 to reflect an additional $610 million of revenue fiscal 2021 and $316 million more revenue in fiscal 2022 than previously assumed. The revised revenue forecast projects fiscal 2022 revenue will still fall 1.3% below fiscal 2021 levels as federal stimulus effects wane. The BEA baseline revenue forecast also does not include another $2.1 billion in federal aid from the ARP or $525 million in one-time money from a settlement with the federal government related to toxic nuclear waste at a Savannah River site. The legislative budget plans will include the additional BEA forecast baseline revenue as debates continue into May.
South Dakota's fiscal 2021 structurally balanced budget estimated reserves slightly above 10% of appropriations. The commissioner of the Bureau of Finance and Management can use general revenue replacement fund balances, if necessary, to balance the annual budget due to an unforeseen revenue shortfall. As with fiscal 2021, the governor's proposed general fund budget is effectively flat and does not rely on reserves to achieve structural balance.
Tennessee's enacted 2021 adopted budget is effectively zero-growth, with reserves approaching $1.8 billion or slightly more than 11% of general fund appropriations for the fiscal year. The budget was balanced with a planned $250 million transfer into the rainy-day fund, bringing the balance up to $1.95 billion (including TennCare reserve), or nearly 12% of estimated general fund appropriations for fiscal 2021. Fiscal year-to-date (March) revenue collections are up $1.4 billion more than budgeted or almost 5%. The governor's originally proposed budget indicated general fund appropriations would rise by about 6% but on April 15, and proposed a revision to his original fiscal 2022 budget. Estimates for the total reserves for fiscal 2022 are up to nearly $2.1 billion.
The state's general revenue-related resources for the next biennium (2022-2023) are estimated to increase to $119.6 billion from $112.4 billion, or 6.3%. However, due to a projected $946 million negative ending balance carried over into the next biennium starting fiscal 2022, coupled with required transfers into the BSF and state highway fund collectively totaling $5.8 billion, and $271 million to shore up the Texas Tomorrow fund, the legislature will have 0.4% fewer resources to balance the state's next budget. More important, the projected negative $946 million balance to end the current biennium reflects current policy and no agency expenditure reduction or revenue supplanting or enhancements from federal funds that occurred during the biennium. Barring any legislative action, the comptroller's office estimates the economic stabilization fund will total $8.95 billion, or approximately 7.6% of general revenue-funded appropriations, by the end of the 2020-2021 biennium. The balance is estimated to rise to $11.55 billion absent any draws by the legislature by the end of the next biennium (August 2023).
The enacted fiscal 2022 budget totals approximately $9.8 billion for the combined general fund and education fund. This includes $1.3 billion of one-time cash funding for infrastructure. In addition, the legislature authorized in its 2021 session new general obligation debt of up to $314 million. Utah's combined rainy-day fund balance total is expected to be nearly $917 million at the close of fiscal 2021 or a strong 10.8% of proposed expenditures. An additional $89 million of rainy-day deposits were approved for fiscal 2022. Following passage of a constitutional amendment, the state is required, beginning in fiscal 2022, to deposit of 15% of ongoing education fund growth into a restricted account for public education until it reaches 11% of designated appropriations for school districts and charter schools. The legislature appropriated $478 million in new ongoing funding, including $104 million for the new stabilization account, and $75 million one-time funding for public and postsecondary education.
The governor's executive budget proposal for fiscal 2022 totals $1.90 billion for the general fund and $1.88 billion for the education fund for a combined $3.79 billion for Vermont's main operating funds, in our view. Key initiatives include funding for environmental projects, modernization of government technology, and housing. Management reports overall spending growth of 3% is mostly due to higher payments to retirement plans required for the fiscal year; pension obligations are fully funded at actuarially determined employer contribution levels. Officials also report that $200 million in one-time investments are funded by using one-time revenues from a growing fiscal 2021 budgetary surplus and additional federal Medicaid match. The proposal fully funds Vermont's reserve accounts at statutory maximums (5% of the previous year's budgetary appropriations).
In April 2021, the governor signed the amended biennium budget after a March 2021 special session of the General Assembly. The amended budget directs $990 million to the revenue reserve over the biennium, for a total ending balance, including the revenue stabilization fund, that exceeds $2 billion, or more than 8% of the annualized general fund budget in fiscal 2022. The budget is based on a February 2021 revenue reforecast that estimates 2.7% year-over-year general fund revenue growth in fiscal years 2021 and 2022 and incorporates increased spending in the current biennium for pay raises for state and teacher employees. Much of the increase reflects spending initiatives passed in the original biennium budget last year, which were subsequently unallotted given revenue forecasts that reflected the uncertainty and recessionary impacts of the pandemic. While the amended budget leverages federal relief aid received in December for certain general fund costs, it does not include almost $3.8 billion in anticipated federal aid to the commonwealth in relief funds, excluding capital or local government funding, in the recently passed ARP Act
The governor's budget proposal for the 2021-2023 biennium totals $57.6 billion for the state general fund and near general fund accounts (education legacy trust account, opportunity pathways account, and workforce education investment account). The proposal calls for significant expenditure growth, in our view, with spending increasing by 10.5% compared with the governor's proposed supplemental budget for the current biennium (which reduces spending by $915 million compared with the enacted budget). On the revenue side, the budget proposes 6.3% growth in resources from the current biennium. Proposed budget bills from the state's House and Senate assume the budget stabilization account will be depleted during fiscal 2021 for budgetary support before rebuilding reserves in the next two biennia. The plans raise the BSA to about $545 million at the end of the fiscal 2021-2023 biennium (or a low 2.0% of annual near general fund expenditures) and $1.125 billion at the end of the fiscal 2023-2025 biennium (or a good 4.1% of annual near general fund expenditures). The legislature adjourned its 2021 regular session on April 25, 2021, after passing operating, capital, and transportation budget bills for the fiscal 2021-2023 biennium. The budgets now go to the governor's desk for vetoes or approval.
The state's enacted fiscal 2022 general fund budget totals $4.6 billion, with severance tax making up 7% of revenues ($320 million). Severance tax estimates are a 27.5% increase over prior--year estimates, due in part to increasing natural gas production. We note West Virginia's severance tax collections have shown volatility and contributed to budget pressures in some years. However, the state has been able to maintain strong budgetary performance and flexibility with the help of timely budget adjustments while shifting some of its reliance on the tax from coal to other mining activities. West Virginia maintains two revenue shortfall reserve funds that, combined, totaled $918 million (December 2020) or 21% of fiscal 2021 appropriations according to the state, and are expected to remain very strong in fiscal 2022.
Wisconsin's governor released his executive budget recommendation for the fiscal 2021-2023 biennium, including a general fund budget spending plan totaling $20.7 billion for fiscal 2022 and $21.1 billion for fiscal 2023. The recommendation includes a substantial expenditure increase of $1.41 billion (or 7.3% above the fiscal 2021 base budget) for fiscal 2022, and a $406 million spending increase (or 2.0% above the proposed fiscal 2022 budget). It also estimates revenue growth of approximately 4.5% in both 2022 and 2023. Assuming no budgetary adjustments, this would potentially result in a net structural imbalance of $1.09 billion at the end of fiscal 2022 and $660.6 million at the end of fiscal 2023. The budget recommendation includes various revenue initiatives to close the net structural imbalance. However, we expect there will likely be substantial revisions from the budget proposal to the final budget, given the division of political control between the governor and the legislature. If current general fund tax collections were to keep pace with projections, the estimated 2021 transfer to the BSF balance would increase by $231.8 million, bringing the BSF balance to $993.9 million, or about 5.2% of fiscal 2021 general fund expenditures.
Wyoming's finances have been under multiyear pressure due to declining coal severance taxes and swings in oil and gas prices. The state does not have an income tax and has relied on significant mining-related taxes, which in the past enabled it to build up fund balances higher than annualized expenditures. Although fund balances remain very high at present, they likely will continue to be drawn down in future biennia due to a structural deficit in the operating fund that provides local school aid and a limited ability to reduce school aid due to court mandates to provide a minimum level of school spending. The state legislature just ended a midbiennium session in which it ratified the governor's earlier midbiennium budget adjustments but left an ongoing structural deficit. Combined general fund, budget reserve account, legislative stabilization reserve account, school foundation program reserve account, and school foundation program balances are estimated to fall from $2.055 billion at the biennium that began July 1, 2020, to $1.26 billion at biennium ending June 30, 2022. This would still represent 54% of annualized appropriations, a level that we would still consider very strong. The state expects to receive $1.1 billion of federal relief funds from the recently enacted ARP.
Todd Kanaster and Ken Biddison contributed research to this article.
- Across U.S. Public Finance, All Sectors Stand To Benefit From The American Rescue Plan, March 18, 2021
- Economic Outlook U.S. Q2 2021: Let The Good Times Roll, March 24, 2021
This report does not constitute a rating action.
|Primary Credit Analyst:||Jillian Legnos, Hartford + 1 (617) 530 8243;|
|Secondary Contacts:||Cora Bruemmer, Chicago + 1 (312) 233 7099;|
|Geoffrey E Buswick, Boston + 1 (617) 530 8311;|
|Sussan S Corson, New York + 1 (212) 438 2014;|
|David G Hitchcock, New York + 1 (212) 438 2022;|
|Timothy W Little, New York + 1 (212) 438 7999;|
|Oscar Padilla, Farmers Branch + 1 (214) 871 1405;|
|Thomas J Zemetis, New York + 1 (212) 4381172;|
No content (including ratings, credit-related analyses and data, valuations, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor’s Financial Services LLC or its affiliates (collectively, S&P). The Content shall not be used for any unlawful or unauthorized purposes. S&P and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness or availability of the Content. S&P Parties are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, for the results obtained from the use of the Content, or for the security or maintenance of any data input by the user. The Content is provided on an “as is” basis. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT’S FUNCTIONING WILL BE UNINTERRUPTED OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages.
Credit-related and other analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact. S&P’s opinions, analyses and rating acknowledgment decisions (described below) are not recommendations to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security. S&P assumes no obligation to update the Content following publication in any form or format. The Content should not be relied on and is not a substitute for the skill, judgment and experience of the user, its management, employees, advisors and/or clients when making investment and other business decisions. S&P does not act as a fiduciary or an investment advisor except where registered as such. While S&P has obtained information from sources it believes to be reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives. Rating-related publications may be published for a variety of reasons that are not necessarily dependent on action by rating committees, including, but not limited to, the publication of a periodic update on a credit rating and related analyses.
To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes, S&P reserves the right to assign, withdraw or suspend such acknowledgment at any time and in its sole discretion. S&P Parties disclaim any duty whatsoever arising out of the assignment, withdrawal or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof.
S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities. As a result, certain business units of S&P may have information that is not available to other S&P business units. S&P has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process.
S&P may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors. S&P reserves the right to disseminate its opinions and analyses. S&P's public ratings and analyses are made available on its Web sites, www.standardandpoors.com (free of charge), and www.ratingsdirect.com and www.globalcreditportal.com (subscription), and may be distributed through other means, including via S&P publications and third-party redistributors. Additional information about our ratings fees is available at www.standardandpoors.com/usratingsfees.
Any Passwords/user IDs issued by S&P to users are single user-dedicated and may ONLY be used by the individual to whom they have been assigned. No sharing of passwords/user IDs and no simultaneous access via the same password/user ID is permitted. To reprint, translate, or use the data or information other than as provided herein, contact S&P Global Ratings, Client Services, 55 Water Street, New York, NY 10041; (1) 212-438-7280 or by e-mail to: email@example.com.