OREANDA-NEWS. Fitch Ratings has assigned a 'AA+' rating to the following state of Washington general obligation (GO) bonds:

--$392,265,000 various purpose GO bonds, series 2017A;

--$101,345,000 GO bonds, series 2017T (taxable);

--$535,125,000 various purpose GO refunding bonds, series R-2017A;

--$272,470,000 motor vehicle fuel tax GO refunding bonds, series R-2017B.

The bonds are expected to be sold through competitive bid on June 28, 2016.

In addition, Fitch has affirmed the state's 'AA+' Issuer Default Rating (IDR) and the 'AA+' rating on the state's approximately $19 billion in outstanding GO bonds.

The Rating Outlook is Stable.

SECURITY

The bonds are GOs of the state to which its full faith, credit, and taxing power are pledged. Motor vehicle fuel tax GO bonds are first payable from state excise taxes on motor vehicle and special fuels.

KEY RATING DRIVERS

Washington's 'AA+' rating reflects the state's solid economy with strong growth prospects, a demonstrated commitment to fiscal balance, and combined long-term liabilities that place a low burden on resources despite an above-average debt load. Fitch believes that strong budget control will allow the state to continue to address challenges, including K-12 education funding demands pursuant to a court decision, while maintaining fundamental financial flexibility even at times of economic and revenue decline.

Economic Resource Base

Washington's economy is characterized by generally sound performance and increased employment diversification. The state economy is growing at a faster rate than the U. S., and the state is well positioned for above-average results going forward. The economy is still heavily influenced by Boeing and Microsoft, while Amazon and other technology companies continue to expand. The workforce is highly educated, income levels are comparatively high, and the state poverty rate is below the national average.

Revenue Framework: 'aaa' factor assessment

Washington relies on broad consumption-based revenues, with no income tax. This revenue mix means that consumer spending and construction trends are quickly reflected in revenue results. Revenue performance over time has tracked economic performance, and Fitch expects this to continue to support solid growth prospects. The state has complete independent control over taxation, with an essentially unlimited legal ability to raise operating revenues as needed.

Expenditure Framework: 'aa' factor assessment

Washington benefits from solid expenditure flexibility with a low burden of carrying costs for debt service and retiree benefits and the broad expense-cutting authority common to most U. S. states. Education is a key cost driver, as is Medicaid, but Fitch expects these costs to remain manageable.

Long-Term Liability Burden: 'aaa' factor assessment

The combined burden of debt plus pensions is low as a percentage of personal income, although solidly above the median for U. S. states. Elevated debt ratios incorporate the funding of substantial capital needs, particularly for transportation but are offset by a moderate unfunded pension liability.

Operating Performance: 'aa' factor assessment

Washington has responsive financial management and very strong gap-closing capacity. In a moderate economic downturn, Fitch expects the state would act in line with historical practice, drawing down reserves and managing revenues and spending to maintain balance and overall financial flexibility. As conditions improve, the state replenishes its cushion against future underperformance. The initiative and referendum environment creates some uncertainty, but this is limited by the legislature's authority to amend or repeal any law approved by voters in this manner.

RATING SENSITIVITIES

SOLID FINANCIAL & LIABILITY MANAGEMENT: The rating is sensitive to shifts in Washington's fundamental credit characteristics, including a low liability burden supported by an increased focus on debt affordability. The rating assumes that the state will address near-term budgetary challenges, primarily related to K-12 education funding requirements, in a sustainable manner.