Fitch: 'fiscal cliff' significant risk to U.S. states

Mon Dec 3, 2012 11:57pm IST

Related Topics

REUTERS - Fitch Ratings warned in a special outlook on Monday that the impending tax increases and federal spending cuts that make up the U.S. "fiscal cliff" pose the most significant credit risk to states in 2013.

"The risk that the fiscal cliff presents to the overall economy is the biggest concern for state credit, as state revenue systems quickly reflect changing economic conditions," said Laura Porter, managing director at the rating agency, in a statement.

Washington's attention has recently focused on the tax section of the cliff but political leaders in states, cities and other parts of the public sector are growing increasingly alarmed about the spending side.

The automatic spending cuts set to take effect early next year are spread throughout the entire federal budget. This would slice funds for states, many with revenues still bruised by the 2007-09 recession, and programs such as Medicaid that states operate with federal reimbursements.

"Decisions that shift cost of services from the federal to state governments, while requiring the states to provide the same level of services, would be most concerning," the report warned. (Reporting By Lisa Lambert and Caryn Trokie; Editing by Chizu Nomiyama)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

WTO DEAL

REUTERS SHOWCASE

Car Launch Ahead

Car Launch Ahead

Tata Motors bets on new sedan to revive weak India sales.  Full Article 

Gold Smuggling

Gold Smuggling

In cat-and-mouse game, India uncovers new gold smuggling route.  Full Article 

Market Eye

Market Eye

FII selling of Indian stocks on Thursday biggest in a month  Full Article 

Profit Falls

Profit Falls

DLF quarterly profit falls 29 pct on lower home sales  Full Article 

Re-gaining Momentum

Re-gaining Momentum

China PMIs jump to multi-month highs in July, add to view economy is steadying  Full Article 

Coal India

Coal India

Some Coal India mines may be run by foreign firms - minister  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage