Texas Credit Rating May Be Downgraded

Mar 21, 2018

Credit CC0 Creative Commons

Credit rating agencies recently sent a warning to the Lone Star State: If Texas doesn’t get its spending under control, including its overstretched obligations in the areas of public education, pensions, transportation and health care, then the state’s credit rating will be downgraded.

In response, reports The Dallas Morning-News­, state Comptroller Glenn Hegar said such an downgrading would result in a “black eye” on Texas. A credit downgrade would mean it would cost Texas more to borrow money. And that would mean less money for the state’s economy. The comptroller is proposing placing most of Texas’s 7.5 billion rainy day fund into an investment fund to cover the rate of inflation.

The rest of the money would be placed in an endowment, which would allow for greater investment growth. These investments would state's long-term obligations, such as pension systems, education, transportation and health care.