Barnes Bashes Moody’s

State Budget Director Ben Barnes says that Moody’s, the Wall Street bond rating agency, has no credibility after it downgraded the state’s credit quality.

(HARTFORD, CT) – Benjamin Barnes, Governor Dannel P. Malloy’s Secretary of the Office of Policy and Management, today released the following statement about the Moody’s change to the state’s bond rating.

Moody’s is wrong in its analysis of the state’s finances, and wrong to change Connecticut’s credit rating. Connecticut has done all the right things to shore up our finances, and Moody’s has responded with a downgrade intended to satisfy their internal corporate need to deflect attention from their historic lack of credibility.

Connecticut has always paid its debt, and remains an attractive issuer of public debt. Investors appreciate Connecticut’s strong income levels, conservative debt management practices, and fiscally conservative leadership.

Moody’s lowered the rating for Connecticut below where it has been since April 2010 even though Connecticut’s fiscal health has significantly improved during that period. Recall that in 2010 Connecticut faced looming multi-billion deficits into the future, had pension funding ratios in the low 40s, had spent the entire rainy day fund, and was in the middle of a series of budgetary gimmicks which Governor Malloy has spent his first year in office undoing.

Today, we have a structurally balance budget, have converted to GAAP, have fully funded our current pension obligations and seen their funding ratio rise, have negotiated significant pension benefit concessions from organized labor, have negotiated significant employee contributions to retiree health benefits, and have begun to add jobs to the state economy.

Moody’s Investor Service decision today to lower their rating of Connecticut’s General Obligation debt from Aa2 (negative) to Aa3 (stable) is unfortunate. It reflects their continued reaction to their central involvement in the financial scandals that led to the deepest recession since the Great Depression. Coming on the eve of our budget release, without an imminent bond sale, suggests that the move is motivated by factors other than Connecticut’s creditworthiness.

Moody’s, which receives approximately $170,000 per year in fees from the State for their bond rating services, is one of three agencies that rate Connecticut debt. The others, Standard & Poor’s and Fitch, continue to rate Connecticut debt as AA (equivalent to Aa2 from Moody’s).



  1. Like the newly revealed budget deficit, the Moody’s downgrade is the result of a budget, proposed by the Governor and adopted by the Democratic legislature, which claimed to balance the budget through tax increases and spending cuts.

    The problem is the huge tax increases were unlikely to produce the projected revenue in a down economy. When you add that shortfall to illusory or overly optimistic estimated savings from spending cuts, your budget is in trouble. Which is exactly where we are today.

    Instead of meeting with labor bosses in Washington, the Governor needs to come home, cancel his UConn-funded junket to Europe and come up with a REALISTIC plan for balancing the budget and restoring the state’s credit rating.

  2. While no relation, Barnes doesn’t seem to have traveled much around the New Haven and Fairfield County cities (i.e. New Haven, Bridgeport, Norwalk and Stamford). If he had he’d realize most of our urban areas are in dire need of economic assistance. Most notably, Bridgeport is basically a bankrupt city that relies upon “borrowing from Peter to pay Paul.” And as the morass becomes more uncontrollable layoffs occur. This doesn’t happen at the upper levels where salaries are in the stratosphere, but at the worker level where the median salary is around $35,000. There is no accountability with elected officials except at the ballot box. And we know who controls that.


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