September 10, 2012

Truth Test: King ad right on tax decrease, dubious on bond rating

By Michael Shepherd
Staff Writer

(Continued from page 1)

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On the Angus King ad's claim that he lowered taxes while governor

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On the claim that Maine had the highest bond rating ever while King was governor; and for the ad overall

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TRUTH TEST is a feature of MaineToday Media's campaign coverage in which we cast a critical eye on the truthfulness of advertising and public comments by political candidates and groups.

The King campaign is right, if looking at judgments from Fitch Ratings. In June 2000, that agency moved Maine's rating from AA up to AA-plus, which the state held until 2004, when it went back down to AA.

King spokeswoman Crystal Canney said Fitch was the agency they confirmed this with, forwarding an email from Fitch saying Maine did get its highest rating from them during the King years.

But Fitch had only been rating Maine since 1996, so history as defined by the King campaign is awfully short. If you look at peak King-era numbers from two other agencies, Standard and Poor's and Moody's, they weren't the highest in history.

From Standard and Poor's, Maine obtained the highest possible rating, AAA, in 1978 and 1982, but could only muster AA-plus ratings from 1991 through 2000. An AAA rating means the company believes you have "extremely strong capacity" to meet bond commitments; AA-plus means they think you are strong, but your long-term risk is a bit greater.

And finally, numbers from Moody's, which has been rating Maine longest, gave Maine a King-era peak rating of Aa2 in 1998, 2000 and 2002.

Though their company judges an Aa rating as being "high quality," it's not their highest rating. That would be Aaa, "highest quality, with minimal credit risk." Maine got that in 1944 before a downgrade in 1974.

This statement that King presided over the highest bond rating ever differs a little bit from a similar claim on King's campaign website, which says that during the King years, "Standard & Poor's maintained its already solid AA+ rating (while) both Fitch and Moody's increased Maine's ratings to AA+, marking the state's first credit rating upgrade in many years."

That's more accurate, though Moody's doesn't use a system involving pluses. And while the "many years" claim is accurate with Moody's, which hadn't upgraded Maine since 1982, it isn't really with Fitch, because they only started rating Maine in 1996, four years before the upgrade.

Verdict: Though King's campaign characterizes one rating right, it eschews two other agencies. The one they choose is also the agency that has been rating Maine for the shortest amount of time. For that, we're downgrading the truthfulness of the statement in the ad.

We rate this statement mostly true.

King's introductory ad is short on substance and detail, but the tax claim is true by any measure. The bond rating claim is dubious, because it ignores two rating agencies to create the most favorable measure of Maine's creditworthiness.

We rate this ad mostly true.

Michael Shepherd can be contacted at 621-5632 or at:

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