RALEIGH — State Treasurer Dale R. Folwell, CPA, joined the credit rating agency Moody’s in recognizing new legislation bolstering the state’s Savings Reserve or, “Rainy Day Fund,” as a “credit positive” measure.
House Bill 7, the subject of a new comment by Moody’s, was approved by the North Carolina General Assembly and signed by Governor Roy Cooper on April 13th. Moody’s is one of the “big three” agencies providing research and credit ratings for commercial and government entities. The company stated in the comment that the measure “will improve the state’s financial flexibility and its ability to respond to future contingencies.”
“The General Assembly deserves the credit for taking the necessary steps to strengthen the ‘Rainy Day Fund,’” said Treasurer Folwell. “The Moody’s comment is proof that this type of leadership has not gone unnoticed by the rating agencies and should only help North Carolina preserve and strengthen its AAA bond rating.”
North Carolina is one of only 12 states in the U.S. that has a AAA bond rating with all three rating agencies. Bond ratings are an important component in determining the costs of borrowing money through the issuance of state and local bonds. Higher bond ratings potentially reduce interest costs, resulting in more funding for schools, roads and law enforcement.
The new law requires 15% of each fiscal year’s estimated growth in sales tax revenue be transferred to the Rainy Day Fund while also limiting the fund’s use to prevent it from being exhausted in a single year.
Moody’s further noted that “the new law will provide guidelines for current and future administrations, helping to maintain a steady level of reserves.”
House Bill 7 was sponsored by Representatives Nelson Dollar, Chuck McGrady, Dean Arp, Bobbie Richardson, George Cleveland, Kevin Corbin, Jimmie Dixon, Carl Ford, Kyle Hall, D. Craig Horn, Pat Hurley, Frank Iler, Susan Martin, Allen McNeill and Harry Warren.
View the complete comment letter issued by Moody’s
the complete comment letter issued by Moody’s
The Department of State Treasurer’s State and Local Government Finance Division handles the sale and delivery of all state and local debt and monitors the repayment of state and local government debt. More information can be found at http://www.nctreasurer.com/slg