Fitch Rates Wisconsin's $102MM GOs 'AA-'; Outlook Stable

NEW YORK--(Business Wire)--
Fitch Ratings has assigned an 'AA-' rating to the State of Wisconsin's
$101,975,000 general obligation (GO) bonds, consisting of:

--$31,885,000 GO bonds of 2009, series A;

--$70,090,000 GO bonds of 2009, series B.

The bonds are scheduled to be sold by competitive bid as early as June 1, 2009.
The series A bonds will be sold as tax-exempt bonds, while the series B bonds
will be sold at the bidder's option as either tax-exempt bonds or taxable build
America bonds with an issuer subsidy. Fitch also has affirmed the state's $6
billion outstanding GO bonds at 'AA-' and withdrawn the 'F1' ratings assigned in
March 2009 to the state's proposed general fund annual appropriation bond
anticipation notes (BANs) of 2009, series 1 and 2, which were not sold. The
Rating Outlook is Stable.

Wisconsin's 'AA-' GO rating recognizes the state's considerable resources, a
diverse economy with an above-average manufacturing presence, and a moderate but
above-average and rising debt burden. Although progress in restoring fiscal
balance had been made, a lingering structural budget imbalance, reflecting
historical reliance on nonrecurring items and shifting general fund expenses to
other funds, has been exacerbated by the current downturn. Recent employment
losses have been worse than those of the nation and the state reduced their
revenue forecasts once again on May 11, 2009 in response to weak April 2009
income tax results.

The May 2009 forecast reduced the general fund tax collection estimate by a
total of $1.6 billion through the end of the coming 2009-11 biennium. The
reduction, the third in the last year, was primarily to individual income tax
revenues, reflecting April 2009 returns that were down 36% over April 2008 (8.3%
for the fiscal year to date). In contrast, the sales tax forecast was increased
for each year compared to the previous estimate. The forecast estimates a total
tax revenue decline of 7.1% for fiscal 2009, which ends on June 30, followed by
an additional 3.3% decline in fiscal 2010 and an increase of 4.5% in fiscal
2011. Individual income tax revenue is forecast down 7.9% in the current year
and another 5.1% in the coming year before rising 3.6% in fiscal 2011. Sales and
use tax revenues drop 3.2% and 1.8% in fiscal 2009 and 2010, respectively, and
then rise 5.5% in fiscal 2011.

The $408 million decline in the fiscal 2009 revenue estimate, to $12.1 billion,
results in a projected year-end deficit of $189 million. The state may restore
balance in fiscal 2009 by accelerating the use of federal stimulus funds, but is
permitted by the state constitution to end the year in a deficit position. The
governor has proposed actions to address the entire $1.6 billion forecast
reduction and these actions are being considered by the legislature. The
proposals include further agency cuts, school aid reductions, labor actions, and
debt restructuring for budget relief.

The fiscal 2009-11 biennial budget has not been finalized. The governor's
February 2009 executive budget proposal to close a then-$5.8 billion total
budget gap incorporated $2.1 billion in funds from the federal stimulus package
and $1.4 billion in revenue measures, including a cigarette tax increase, an
income tax increase for high earners, and corporate tax changes. The proposal
left a $216 million ending balance for fiscal 2009, rising to $269 million in
fiscal 2011. Despite reserve funding provisions, the state's financial reserves
were minimally funded in recent years and have been depleted as part of budget
solutions in the current downturn. The state carries a GAAP deficit due to the
timing and treatment of local aid payments.

Wisconsin's economy has lost jobs in every month since June 2008, with the pace
of loss accelerating sharply in the last few months and unemployment rates
rising rapidly. April 2009 employment was down 4.5% year-over-year, compared to
the nation's 3.8% decline, with losses in all sectors except for education and
health services and government and in all major labor markets. The state's
unemployment rate of 8.6% in April 2009 was 97% of the U.S. rate but well above
the state's April 2008 rate of 4.5% and December 2008 rate of 5.9%. Since 2002,
personal income growth rates have lagged the nation. Wisconsin's personal income
per capita ranks 27th among the states at 94% of the U.S.

Net tax-supported debt, including a $1.5 billion March 2009 appropriation bond
offering to purchase tobacco settlement revenues that the state previously sold
to the Badger Tobacco Asset Securitization Corporation, totals $10.9 billion, or
5.2% of personal income, a moderate but above-average and rising debt burden.
Excluding the general fund annual appropriation bonds issued for pension
funding, Wisconsin's debt burden drops to 4.5% of personal income. Pensions are
well funded.

The 2009 series A bonds are preliminarily scheduled to be due May 1, 2012-2019
and are not subject to redemption prior to maturity. The 2009 series B bonds are
preliminarily scheduled to be due May 1, 2020-2030, callable at par beginning
May 1, 2019. Maturities are subject to change prior to the competitive sale.

Fitch's rating definitions and the terms of use of such ratings are available on
the agency's public site, www.fitchratings.com. Published ratings, criteria and
methodologies are available from this site, at all times. Fitch's code of
conduct, confidentiality, conflicts of interest, affiliate firewall, compliance
and other relevant policies and procedures are also available from the 'Code of
Conduct' section of this site.

Fitch Ratings, New York
Laura Porter, 212-908-0575
Richard Raphael, 212-908-0506
or
Media Relations:
Cindy Stoller, 212-908-0526
Email: cindy.stoller@fitchratings.com

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