Bond-rating firms eye Montana finances

Associated Press
HELENA (AP) – Officials from two Wall Street bond-rating companies got a firsthand look at the Montana
economy Wednesday and will use the information in analyzing the state’s financial condition just before it
sells $13 million in bonds.

Standard & Poor’s and Moody’s Investor Service will update ratings for Montana’s government issued bonds, and those
ratings will determine how much it costs the state to borrow the money in July.

David Hitchcock, director of public finance ratings for Standard & Poor’s, said Montana appears better off financially than
most of the other states. Those states hardest hit by the recession are ones more dependent on income and capital gains
taxes from wealthy residents, and with economies more dominated by high-tech industry than Montana, he said.

Hitchcock noted that air travel suffered in the aftermath of the September terrorist attacks, but most of Montana’s tourists
get here by car.

Cathy Muri, who heads the state’s Administrative Financial Services Division, said the briefing for the two companies is
done every few years and this one coincidentally occurred on the eve of a bond sale.
The state plans to borrow $10.47 million for building projects and $2.5 million for hardrock mining cleanup projects.
Muri said Standard & Poor’s and Moody’s both rate Montana’s bonds as one step below the top mark of AAA. A
downgrade would increase the interest the state has to pay to those who buy the bonds, and that would raise the cost of
borrowing the money, she explained.
Gov. Judy Martz told the company representatives that most states are having difficult financial times, but Montana is one
of only four without a budget deficit.

Chuck Swysgood, budget director for Martz, outlined the administration’s effort to deal with a dwindling budget surplus
through spending reductions. Revised predictions for the coming year show revenue down $111 million from earlier
forecasts, he said.

Last week, his office recommended $23.8 million in cuts for the next budget year starting July 1. Swysgood said the
governor will decide by June 21 what, if any, decreases are needed.
Hitchcock and Ed McGlade, along with Moody’s Pat Ford, also heard reports about the tourism industry and agriculture.

They were particularly interested in the effects of the new federal farm bill in Montana.
Kevin McNew of Montana State University-Bozeman, said farmers are likely to get less money than they did under the
farm program that was in place for the past five years.

Paul Polzin, director for the Montana Bureau of Business and Economic Research in Missoula, said the state’s economy
dodged the worst of the national recession because Montana has little or none of the industries – high-tech and automobile
manufacturing – most affected by the slowdown.
Copyright 2002 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or
redistributed.

Copyright © The Billings Gazette, a division of Lee Enterprises

http://www.billingsgazette.com/index.php?id=1&display=rednews/2002/05/30/build/local/82-bond-finances.inc