Rainy Day Fund Proposal Boosts State's Credit Rating

The Standard and Poor's credit rating agency has given Washington State a boost-- and gives some of the credit to Governor Christine Gregoire's proposal to strengthen the state's "rainy day fund:"

S&P improved its outlook for the state's creditworthiness to "positive" from "stable," the service said in a press release...S&P attributed the upgrade to "the state's sustained economic expansion and robust revenue performance, which is translating into a much improved budget and financial position," the service said in a statement.The statement went on to say: "The outlook reflects the state's proposed move to formalize its rainy day fund reserve, which will provide for increased financial stability in times of future economic downturns."

Gregoire's proposal, which would create an annual automatic deposit into the state's rainy day fund, is a good first step toward fiscal accountability, as S&P notes. But it's not all sunshine and lollipops. As the Washington Budget and Policy Center notes, the governor's proposal will likely not be sufficient to ensure that the state's rainy day fund can weather the next recession. Read the WBPC report here. Read ITEP's policy brief on rainy day funds here.