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Good news: The State of Alaska’s bond rating is again the highest grade it can be, AAA.
The rating confirmed by the Department of Revenue Tuesday was issued by Fitch Ratings, now the third agency to give the state the highest possible rating. Moody’s Investor Service upgraded Alaska to AAA in 2010 and Standard and Poors in 2012.
The Revenue Department says the three AAA ratings reflect “the state’s practice of maintaining exceptionally large reserves, extensive fiscal flexibility, and despite its deep financial resources, budgetary restraint.”
Gov. Sean Parnell said the state has more than $16 billion in budget reserves; more than $44 billion in the Permanent Fund; and is paying down unfunded liabilities, “and we’ve been named the sixth best-run state in the nation.”
According to Revenue, Fitch said the upgrade was based on the state’s large reserves, providing “multiple times coverage of its debt obligations;” conservative financial management; its manageable liability, with a “moderate” debt burden, reforms to its pension programs and closing of its defined benefit plans; and its good credit profile.
The dependence of the state’s economy and finances on the volatile natural resource industry is a vulnerable area, Fitch said, although natural resources also have provided employment and income, as has government.
The upgrade to AAA came from a rating of AA+. Gov. Parnell celebrates it, and makes a promise, as well: “Our responsible and responsive approach will keep Alaska on solid footing for years to come.”
The rating upgrade is, indeed, something to be celebrated. Hear, hear.