HT to Jim Galloway at the AJC for Moodyâ€™s awards metro Atlanta a â€˜credit negativeâ€™ for TSPLOST failure:
The note that arrived from Moodyâ€™s is pretty self-explanatory. The defeat of the transportation sales tax vote in metro Atlanta and eight other regions of the state wonâ€™t result in an immediate downgrading of credit â€“ but could result in one when the state or local governments go bond-shopping in the future.
From that memo, as quoted by the AJC:
In our Credit Outlook released today, Moodyâ€™s announced that voter rejection of a 1% Special Purpose Local Option Sales Tax (T-SPLOST) in nine of 12 regions of the State of Georgia is a credit negative for those areasâ€¦, especially for Atlanta because of the cityâ€™s position as an economic hub, which could be hurt by the areaâ€™s current condition of infrastructure.
The Atlanta region needs major upgrades to its dated and limited transit system and congested roadways to maintain its long-term position as an influential economic center. The region will now be challenged to fund such projects on a local or state level, as the region had not formulated a specific contingency plan for identified projects if voters rejected the tax.
Conversely, voter approval and adoption of T-SPLOST is a credit positive for the three regions that approved it. These regions will benefit during and after the new sales taxâ€™s 10-year collection period as the proceeds will fund a combined 121 transportation-related projects. These regions are the Central Savannah River, the River Valley District, and The Heart of Georgia District.
Moodyâ€™s declaration of â€œcredit positiveâ€ or â€œcredit negativeâ€ does not connote a ratings change. We are simply stating what the credit impact could be on issuers as a result of this new legislation.
Credit ratings agencies like Moody’s lost a lot of credibility for mistakes in the lead up to the financial crisis, but their ratings certainly matter.
I didn’t anticipate this as a fallout from the T-SPLOST failures, but I’m not surprised.