Moody's: US state debt growing at slowest pace in years
News Release from Moody's Global Credit Research - May 30, 2013
New York, May 30, 2013 -- Growth in outstanding debt issued by all US states slowed to 1.3% in calendar year 2012, says Moody's Investors Service in its annual update, "2013 State Debt Medians Report." The near-flat growth in debt was well below the 7% average annual growth of the past 10 years and the recent peak of 10% growth in 2009.
The 1.3% growth in 2012 marked the third consecutive year the pace of growth in state debt had dropped. Moody's expects the growth in state debt to continue to be slow.
Moody's state medians show Connecticut, Massachusetts, Hawaii, New Jersey and New York have the highest net tax-supported debt per capita.
"Legal debt limitations, state-level austerity spending, and anti-debt sentiment have reduced states' appetite for new money borrowing," said Baye Larsen, a Moody's Vice President and Senior Analyst. "Additionally, debt plans have been influenced by uncertainty regarding federal fiscal policy and the impact of federal budget austerity on the national economy."
States will continue to defer debt plans until the impact of federal budget balancing efforts are better understood, says Moody's.
State debt service costs increased by 3% in 2012, much slower than the 8.6% growth experienced in 2011.
In all, Moody's says the combined amount of net tax-supported debt for the 50 states increased to $516 billion in 2012 from $510 billion in 2011.
The largest contributors to growth in net tax-supported debt in 2012 were California, Massachusetts, Virginia and Washington, with each adding between $1.2 billion and $1.7 billion in debt.
Seven states saw notable declines in net tax-supported debt. On a dollar basis, the largest decreases were in Arizona, Florida, Illinois and New York. On a percentage basis, Kansas and Utah saw the largest declines, at 8% and 7% respectively.
For more information, Moody's research subscribers can access this report at LINK.
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