Having downgraded Connecticut to an “AA-” rating in May, Standard & Poor”™s (S&P) has taken another look at the state ”¦ and again doesn”™t like what it sees.
In a new report, S&P evaluated the ability of the 10 states with the most tax-supported debt to respond to significant fiscal stress in the first year of a moderate recession.
It found that Connecticut”™s low budget reserves, high fixed costs and overreliance on income taxes from the wealthy leave it poorly positioned should such an economic downturn occur.
Although S&P put the chances of a U.S. recession in fiscal year 2017 at 20 to 25 percent, it said that the first year of a moderate recession would cost Connecticut $1.15 billion in revenue. The state”™s reserve fund currently stands at about $127 million.
In all, S&P said the 10 states evaluated ”” which also include California, Florida, Illinois, Massachusetts, New Jersey, New York, Pennsylvania, Washington and Wisconsin ”” would see a collective revenue shortfall in a recession of more than $27 billion.
