State economic outlook dims |
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Tue, 20 Feb 2007 23:58
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COLUMBUS, Ohio (AP) - A widely watched investors service on Tuesday reduced Ohio's economic outlook from stable to negative, reflecting the state's declining manufacturing base, changes in the tax structure, the recent scandal over investment losses and pressure to spend more on education and health care.Moody's Investors Service changed its outlook on the eve of a $250 million bond sale to pay for new schools. The change in outlook did not immediately affect the state's bond rating, which remains Aa1, the second-highest of Moody's 10 ratings.The service had upgraded Ohio's outlook from negative to stable in November 2004. But the state's continued dependence on manufacturing is hurting its economy, Moody's said.Uncertainty over revenues under the state's new tax structure also affected the change, Moody's said. In 2005, the Legislature replaced most business taxes with a tax on a company's sales. Lawmakers also authorized a 21 percent income tax cut to be phased in over five years.A scandal at the Ohio Bureau of Workers Compensation has cost the state $300 million in lost investments, but it also has delayed the release of financial reports from the agency for 2005-06.On the plus side, Ohio has rebuilt its rainy day fund and found ways to patch budget holes quickly, Moody's said.Copyright 2006 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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