After credit ratings agency cites tobacco securitization in outlook downgrade, Kansas budget director rebuts concerns
The Kansas budget director rebutted concerns on Friday that selling off annual payments that go toward children’s programs could harm the state’s credit rating, after a ratings agency cited the possibility this week in downgrading its credit outlook.
Gov. Sam Brownback’s budget plan proposes securitizing annual payments received as part of an agreement between Kansas and large tobacco companies that currently funds early childhood programs. Securitizing would produce hundreds of millions of dollars in immediate cash for the budget but would greatly diminish or eliminate annual payments going forward.
S&P issued a lowered credit outlook for Kansas on Wednesday. Its report referenced weak economic trends and structural budget pressures. The ratings agency said pension underfunding and tobacco securitization would place additional pressure on future state budgets.
Shawn Sullivan, the budget director, said S&P was looking at structural balance.