Treasurer forms team to protect bond rating

Treasurer Kate Marshall has formed a Bond Rating Advisory Team to help protect Nevada's bond rating.

With the recession deepening, she said Nevada has landed on a watch list with bond rating agencies and, if those agencies aren't reassured about the state's financial situation, could see that bond rating dip.

Marshall said the current bond rating is AA+, second highest possible, which gets the state among the lowest interest rates possible when it sells bonds.

"If we lose that, it will cost the state hundreds of thousands, possibly millions more, to bond," she said. "In this economic time, where it used to cost you a half percent for a downgrade, it could now cost us 11⁄2 percent and, if the credit rating really drops, you might not even be able to sell bonds."

She said the so-called BRAT will advise her office as it prepares for bonding sales and help assure bond rating agencies that all the participants "are at the table" and participating in the state's financial policies. The team will include officials from the Nevada Association of Counties, Nevada Bankers Association, League of Cities, Mining Association, Resort Association, retailers, NV Energy, Southwest Gas, the Clark County School District and the Clark and Washoe treasurers among others.

Marshall cited a report by one of those agencies, Moody's, which mentions Nevada as one of six states with a "negative outlook."

"These outlooks indicate that we believe there's a greater than 50 percent chance of downgrade over the medium term," the report states.

It specifically cites Nevada's dropping gaming revenues: "While this downturn has hit virtually every state that offers gaming to some degree, no state has suffered more than Nevada where we'd previously thought the casino industry was recession proof."

Marshall said the BRAT is a critical component to the effort to protect the bond rating but not the only one.

In addition to financial management policies, she said those rating agencies are keeping a close eye on how the Legislature handles the budget crisis.

"The Legislature and the governor's office will have to address the budget and have to address the budget long term, not a quick fix," she said. "They're looking for the states ability to manage its finances long term."

The group will hold its first meeting April 30 by conference call.