OKLAHOMA CITY (AP) — Oklahoma's drop in bond ratings may increase the state's borrowing costs for several major projects.
Credit rating services agency Fitch Ratings announced Tuesday that it's lowering Oklahoma's issuer default rating from AA+ to AA.
Economic and political factors contributed to the downgrade, the agency said in its report.
"The state has been unable to address its fiscal challenges with structural and recurring measures and revenue collections continue to reflect subdued energy prices," the report said.
The report noted that the state has continuously relied on its reserve fund and one-time revenue sources to fill large revenue gaps over the last couple of years rather than broadening its tax base.
State Treasurer Ken Miller said the downgrade isn't surprising. He said he and other state leaders cautioned before the last legislative session that a downgrade could be possible if the Legislature didn't address the structural imbalance in the state's revenue sources.
"Clearly, Fitch did not see the necessary corrective steps taken last session and this downgrade is the result," Miller said.
The state's projects that may be affected by the change include the American Indian Cultural Center in Oklahoma City, the Oklahoma Museum of Popular Culture in Tulsa, some higher education construction projects and a new state Health Department lab.
State Bond Adviser Jim Joseph said it's impossible to determine the impact a rating change will have on bond interest rates.
"Anytime you're downgraded, it's going to end up costing you more money in the long run," Joseph said. "Any investor is going to ask for more yield when they buy a lower-rated bond."