It's hard to improve a Aaa credit rating, but Indiana just did - sort of.
In its credit outlook reported Monday, Moody's stated that Indiana's decision to use a budget surplus to reduce $147 million of outstanding debt in mid-November is a credit positive for the state.
Gov. Mitch Daniels announced last week that he used the excess dollars to pay off the mortgages of 10 state facilities early.
The actions eliminate about $68 million that otherwise would have needed to be spent in the 2014-15 budget, in addition to nearly $125 million that would have needed to be spent between 2016 and 2033.
Even after these repayments, the Indiana Office of Management and Budget is forecasting fiscal year-end reserves in excess of $2 billion again next June.
Moody's said the move reduces the state's outstanding net tax-supported debt, which is already among the lowest of the 50 states, by 5 percent. It also drops the already low debt burden of $2.9 billion; on a net tax-supported debt per capita ranking. Indiana ranks 42nd at $446, well below the U.S. median of $1,117.
Critics point out these debt calculations don't include unfunded pension obligations the state has and a $1.7 billion loan from the federal government's unemployment trust fund.
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