North Carolina is one of sixteen states well-prepared for a financial recession according to an economic study released this month by researchers at Moody’s Analytics.
North Carolina has a record $1.5 billion savings reserve and has significantly improved its tax structure under a Republican-led state legislature.
Moody’s Analytics provides financial insights on capital markets and credit risk management for investors, strategic planners and policymakers, and “pioneered the concept of stress-testing the public sector.”
Its study applies potential economic recession scenarios, ranging from moderate to severe, to each state’s fiscal readiness for an inevitable downturn.
The analysis considers the ratio of each state’s savings reserves to its spending commitments and measures the predicted impact of a recession on tax revenues. State budget flexibility and planning are also factored into the comparisons.
It groups states into three categories of preparedness: sixteen states that “have the funds they need,” nineteen states that “have most of the funds they need,” and fifteen states that “have significantly less funds than they need.”
North Carolina ranked in the top-third of the Moody’s Analytics study as one of sixteen states that “have the funds they need.”
In April of 2017, Moody’s Investor Service also praised North Carolina’s House Bill 7 Savings Reserve Requirement as a “credit positive” commitment.
In years past, according to Moody’s, “North Carolina’s reserves have been below average.”
The October “stress test” study by Moody’s Analytics also notes “policymakers should be diligently implementing statutory reserve guidelines,” as North Carolina did with House Bill 7.
“The people of North Carolina can have confidence our state is well-prepared for emergencies thanks to a better budget process and smart savings by legislative leaders in Raleigh,” commented House Speaker Tim Moore. “I’m proud the North Carolina House has served families and businesses responsibly with careful planning of our state’s financial security.”