WASHINGTON Oct 4 A short U.S. budget shutdown
would not have a significant impact on the credit quality of
states, local governments, non-profit healthcare centers,
airports, roads, mass transit or public housing, Standard &
Poor's Ratings Services said on Friday.
In a comment echoing those from the other two major rating
agencies, Moody's Investors Service and Fitch
Ratings, S&P said a long-term shutdown could
hurt states and other parts of the public finance sector by
slowing economic growth.
"Even if the shutdown were to persist, we don't expect
automatic, wholesale downgrades on states," S&P said. "A
protracted breakdown in federal negotiations could significantly
undermine consumer and investor confidence and have significant,
long-lasting consequences to the national and the state
Currently, Congress is deadlocked over passage of the
national budget, which led the federal government to shut down
operations this week.
The major funding source for states - federal reimbursements
for the healthcare program Medicaid - is untouched in the
shutdown. S&P expects other grants to be delayed slightly, and
that most states will not have to borrow to make it through.
State revenues have been growing, providing a cushion for
delayed grants or payments.