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VOL. 35 | NO. 36 | Friday, September 9, 2011




Haslam: External factors could sway Tenn. credit

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NASHVILLE (AP) — Concerns over federal spending decisions could sway decisions over whether to downgrade Tennessee's debt rating despite what Gov. Bill Haslam calls the state's strong case for how it manages its finances.

The Republican governor led a delegation to annual meetings with the three major ratings agencies in New York on Tuesday and Wednesday, seeking to persuade officials to maintain Tennessee's high rating despite Standard and Poor's recent downgrade of the federal government's debt.

"I would characterize all three discussions as very positive," Haslam told reporters in a conference call after the final meeting with Moody's Investor Services.

"If there's a concern from the agencies, it will be the external factors," he said. "Basically of what happens in Washington."

Federal funds account for about 40 percent of Tennessee's $30.8 billion annual spending plan. Federal money also flows directly to a large number of entities in the state, ranging from Fort Campbell to Oak Ridge National Laboratory, Haslam said.

Pending federal spending reductions are a major factor that the state can't control, though Haslam said the delegation argued that Tennessee is no more vulnerable to cuts than other states.

Haslam said officials at the ratings agencies pleased to see each state agency's plan contingency plans for federal cuts of 15 percent and 30 percent. Finance Commissioner Mark Emkes had assigned each state department to assemble those plans in response to previous meetings with credit agencies last month.

"They were used to seeing contingency planning and risk assessment from corporations, so I think they were favorably impressed that the state government had looked at this and gone through the process," said Emkes, a former CEO of tire maker Bridgestone Americas.

State Democratic Party Chairman Chip Forrester was less laudatory about what he called Haslam's "slash-and-burn budget."

"There's no doubt Wall Street was impressed with Governor Haslam's contingency plan to fire 5,000 workers and eliminate crucial services that keep families healthy, children educated and the disabled properly cared for," Forrester said in a statement. "However, Tennesseans who've seen this extreme plan are not so enthusiastic."

Joining the Haslam administration and constitutional officers in New York was state Senate Speaker Ron Ramsey, R-Blountville, who sought to assure the ratings agencies that lawmakers have the political will to make difficult cuts.

In a statement titled "Tennessee wisdom heads North," Ramsey said officials presented compelling reasons not to downgrade the state's debt rating.

"Few states could even dream of making the impressive case we did these past two days," he said. "While the nation trends downward, Tennessee is looking up toward the horizon. "

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