GE relocation boosts Mass. credit rating
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General Electric's plan to relocate its corporate headquarters is credit positive for the City of Boston and credit negative for Connecticut, where the economic recovery lags the nation and the state has not regained the total jobs lost during the recession, according to Moody's.
According to the credit rating agency's Jan. 21 weekly credit outlook, GE's move from Fairfield, Conn. to Boston "provides greater diversity to an already-strong economy and tax base that continues to experience historic growth." Moody's reported that Boston's $128 billion tax base had $47.5 million in new growth and a 15.6 percent increase in total assessed value in 2016 and the city is "well positioned to absorb tax incentives offered to attract GE (reportedly up to $25 million in property tax relief over 20 years)."
For Connecticut, the near-term tax revenue loss will be "muted" since only 200 employees are expected to relocate to Boston, according to Moody's, which raised broader concerns about the state's condition.
The state is "grappling with revenue underperformance and budget gaps that have led to low reserve levels" and the most recently enacted state budget included increased corporate taxes. In addition, Connecticut is experiencing "domestic out-migration" and its adjusted net pension liability as a percent of revenue was 213 percent, or more than three times the 50-state median.
GE is the 20th largest employer in Connecticut, with about 4,300 employees in that state and 800 in its Fairfield headquarters. Moody's said it expected about 600 GE employees in Connecticut to be reassigned elsewhere in the company with some relocating to other GE offices in that state.
Moody's noted its observations reflected a credit factor and not a rating or outlook change.
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