Moody's Investors Service says Louisiana's loss of as much as $859 million in Medicaid financing is a "credit negative" for the state.
The notation from the bond-rating agency does not yet affect the state government bond rating — currently high investment grade and stable — but denotes for investors a significant change in the state's balance sheet.
The Times-Picayune reports (http://bit.ly/Q4abRS) the cut is tied to a congressional reduction in Louisiana's federal Medicaid financing rate.
Michael Diresto, spokesman for the state Division of Administration, said Gov. Bobby Jindal believes state finances are on firm ground. Diresto said the state is acting swiftly to respond to the cut and that credit rating agencies have counted such action as a positive factor in upgrades since Jindal took office in 2008.