CHICAGO -- Moody's Investors Service on Friday raised the ratings on $4 billion of outstanding lease revenue debt of the Ohio Building Authority and the Ohio Public Facility Commission to Al from A.
"Moody's is now comfortable that regardless of the economic condition of the state of Ohio, management will respond appropriately," said James Dearborn, an assistant vice president at Moody's.
Dearborn also cited the prospects for "slow, steady economic growth" in the state as another reason for the upgrade.
In a credit comment, the agency pointed to "corrective actions" undertaken by the state over the last three fiscal years to maintain balanced finances in the face of the recession.
"Three years of downward revenue revisions resulting from the national recession were offset by expenditure reductions of over $700 million and revenue adjustments of $200 million," the agency reported.
Moody's also mentioned economic restructuring that is turning the state more toward services and trade and less toward manufacturing. The agency also cited moderate debt levels, saying that 80% of the state's debt is supported by lease obligations.
The upgrade affects $2.6 billion of lease debt issued by the Ohio Public Facilities Commission and $1.3 billion of lease debt issued by the Ohio Building Authority. The debt is supported by biannual appropriations by the legislature. Moody's also confirmed an Aa rating on $907 million of Ohio's outstanding general obligation debt.
Not included in the rating upgrade was $214 million of workers' compensation facilities bonds sold by the Ohio Building Authority earlier this month. The bonds, which are backed by revenues from the Administrative Cost Fund of the Ohio Bureau of Workers' Compensation and are subject to biannual legislative appropriation, were rated A. Dearborn said the rating was not raised because of the more limited pledge of revenues for the bonds.
Greg Browning, Ohio's budget director, cited Gov. George Voinovich and the legislature for the state's fiscal performance.
"The governor has a long history of strong financial management and responsible financial management," Browning said, adding that the Voinovich Administration "works hand in hand with legislative leaders to make sure the budget is balanced."
Under Ohio's $30.7 billion general fund budget for the fiscal 1994-95 biennium, the state is projected to end fiscal 1994 with a $120.7 million balance and fiscal 1995 with a $71.6 million balance. At the end of fiscal 1993, the state was able to place $21 million in the budget stabilization fund, which had been depleted in previous years to deal with budget shortfalls. Another $32 million is expected to be placed in the fund at the end of fiscal 1995, Browning said.
He said that so far in fiscal 1994, revenues are up while expenditures are down. Browning said that the current two-year budget was based on "onservative revenue estimates."
Ohio's fiscal year been July 1.
Outstanding unenhanced debt of the two state authorities is generally rated A-plus by Standard & Poor's Corp.