Citing weak economic trends and structural budget pressures, S&P Global Ratings revised the outlook on Kansas’ AA-minus credit rating from stable to negative Wednesday.
As Reuters reports, the credit rating agency faulted the state for its continuous use of one-time revenue measures to shore up operational spending. For the upcoming biennial budget, nonrecurring measures include a plan to sell bonds backed by Kansas' share of a nationwide settlement with U.S. tobacco companies, liquidation of a capital reserve, and pension underfunding, S&P said.
In a statement, S&P analyst Oladunni Ososami said Kansas has a one in three chance of a credit rating downgrade in the next two years.
The Kansas budget shortfall is feeling the effects of action taken by Gov. Sam Brownback and the Republican-controlled legislature in recent years to cut corporate and other income taxes to help the state compete with other states for business development and jobs, Reuters reports.
The state’s shortfall is complicated by a pending court decision regarding whether the state is providing school districts adequate funding.