Kansas’ credit outlook is now stable after lawmakers repealed Gov. Sam Brownback’s tax cuts earlier this week, according to Moody’s Investor Services.
The rating agency affirmed the state’s Aa2 credit rating and revised its outlook from negative to stable following Kansas’ lawmakers decision to override Brownback’s veto and repeal his 2012 income tax cuts.
“Unlike a negative outlook, which connotes downward pressure on the rating and the chance of a downgrade, the stable outlook indicates the rating should remain at its current level for the next 12-24 months,” Moody’s said in a statement.
Kansas has experienced multiple credit downgrades in recent years. Moody’s noted that the state has repeatedly hurt its credit outlook by depleting cash reserves and deferring pension contributions, but the $1.2 billion tax increase would “go a long way toward solving the state’s budget challenges.”
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Moody’s also upgraded the credit rating for the state’s IMPACT bonds, which are based on income tax, from A1 to A3.