Moody’s has downgraded Kentucky’s credit rating because of the low funding level of the state’s pension systems and lackluster revenue gleaned from taxes.
The news comes after the state missed its own revenue prediction by $135 million at the end of the last fiscal year, which finished on June 30.
“The downgrade reflects revenue underperformance that will challenge the commonwealth’s ability to increase its very low pension funding levels,” Moody’s wrote in a news release. “The commonwealth has one of the heaviest unfunded pension burdens of all states. The commonwealth’s high fixed costs will also restrict fiscal flexibility.”