JUNEAU — In an analysis published Tuesday, credit rating firm Fitch Ratings has warned that Gov. Mike Dunleavy’s proposed constitutional amendments, if approved by the Alaska Legislature and voters, could “exert pressure on the ‘AA’ (rating) for the state.”
Tuesday’s announcement is not a credit rating downgrade: It is an announcement that passage of the amendments could lead to one in the future.
The governor has proposed three amendments: One would require voter approval of new taxes and tax increases; the second would enshrine the Permanent Fund dividend in the Alaska Constitution; the third would tighten the state’s existing spending cap.
Collectively, Fitch’s analysts wrote, the amendments would weaken the financial flexibility of the state. In addition, the amendments have the potential to increase pressure on the Alaska Permanent Fund. Last year, Fitch analysts warned, “The maintenance of reserves is a significant rating consideration for Alaska given the volatility inherent in the economic and resource base.”
Fitch’s AA rating for Alaska is the second-highest notch in its scale, according to its rating definitions.
In a statement released after the Fitch report, commissioner Bruce Tangeman said the governor’s office hasn’t had a chance to speak with ratings agencies yet. In addition, the report Tuesday doesn’t fully take into consideration the governor’s proposed budget cuts.
“While it’s true that the Governor’s amendments will limit the ability for politicians to unilaterally impose taxes on Alaskan families and businesses, and will require automatic dividend payments to residents – which will limit expenditure decisions, these are important cornerstones of the Governor’s platform of reinstating the residents trust in state government,” Tangeman said in part by email.