Credit agency downgrades Massachusetts’ bond rating

S&P says lowered bond rating reflects the state's failure to rebuild state reserves.

BOSTON (WWLP) – One of the nation’s largest credit rating agencies downgraded the Massachusetts’ bond rating last week.

The state’s lower bond rating could impact borrowing costs for the state. But lawmakers plan to solve some of the agencies issues in next year’s budget proposal.

S&P Global Ratings downgraded Massachusetts’ general obligation debt rating Friday from “AA+” to “AA”. The agency said this lowered bond rating reflects the state’s failure to rebuild state reserves.

This comes at a time when state revenues are nearly $440 million below expectations for fiscal 2017.

Governor Charlie Baker said the state has made progress to pay long-term obligations without raising taxes. Lawmakers have a proposal in next year’s budget to deposit $98 million into the state’s Stabilization Fund.

“I think it’s very hard to predict where the tax situation is going to be, where the revenue situation is going to be,” Secretary of the Commonwealth Williams Galvin said. “We have a lot of uncertainty now about healthcare. That may mean a lot of uncertainty in our budget going forward.”

Under the new proposal, the state will deposit half of all tax revenues that come in above projections into the fund at the end of the fiscal year.