July 26, 2012

Moody’s Investors Service, a major bond ratings agency, is painting a gloomy picture of Louisiana’s future fiscal health due to the state’s loss of more than $850 million in Medicaid funding thanks to a federal miscalculation, calling the potential budget crisis a “credit negative.” The Moody’s statement has not affected the state’s bond rating, which according to a Times-Picayune report currently stands at “high investment grade and stable,” but it does signal to investors that the state’s finances are precarious.

Moody’s issued the statement before the Jindal administration unveiled $551 million in spending cuts to the state’s Medicaid program. A Jindal spokesman says the governor believes Louisiana’s finances are safe, although more cuts to health services for the poor across Louisiana could be announced later in the budget year, which runs July 1-June 30.

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