Fitch Initiates Rating Outlooks on U.S. State GOs.

NEW YORK -- Fitch Ratings assigns initial Rating Outlooks to U.S. state general obligation (GO) ratings (see list at end) and assigns an overall Stable Rating Outlook to the sector. Other tax-supported state debt ratings are not being assigned Rating Outlooks now, but will be in the near future. Most states are assigned Stable Rating Outlooks, three are assigned Negative Rating Outlooks, and one is assigned a Positive Rating Outlook. Positive or Negative Rating Outlooks indicate that a rating change is likely, although not inevitable, over the next one to two years. Importantly, the specific state Rating Outlooks reflect economic and fiscal conditions that may have existed for some time, and are not necessarily reactions to recent events such as proposed budgets under consideration. Nevertheless, future governmental decisions and economic events could determine rating directions.

For Louisiana (rated 'A') the state has taken timely and prudent balancing actions in response to the effects of Hurricanes Katrina and Rita. Reserves are large and revenues have far exceeded downwardly revised estimates following the storms. However, economic and property losses have been tremendous, and the extent and timing of the rebuilding of the New Orleans area remain uncertain. Due to this uncertainty, the state's rating is assigned a Negative Rating Outlook, and the rating is affirmed at 'A' and removed from Rating Watch Negative, where it was originally placed on Sept. 12, 2005. The rating was downgraded to 'A' from 'A+' on Dec. 1, 2005 following the hurricanes.

The Negative Rating Outlook on Michigan (rated 'AA') considers the prospects of massive downsizing and uncertainty in the domestic auto industry, which dominates manufacturing employment in this state. The current rating for the state reflects its lower moderate debt burden and strong fiscal management, including the demonstrated ability to maintain balanced operations despite recessionary conditions now entering a sixth year.

Illinois (rated 'AA') is assigned a Negative Rating Outlook, primarily reflecting the state's large anticipated fiscal challenges, despite recently improved revenue performance. Illinois must confront its massive unfunded pension liability; large increases in pension funding requirements begin in the next budget cycle in order to contain further growth in this liability.

California (rated 'A') is assigned a Positive Rating Outlook, reflecting general economic and revenue improvement and progress in reducing its structural imbalances, although the final outcome of the proposed budget could affect rating direction.

The overall Stable Rating Outlook for state ratings reflects a favorable economic picture and continued positive revenue performance. Strong revenue growth, which, in many situations, has been fueled by strength in corporate income, capital gains, and real estate, is expected to be less robust going forward. Reserves are being rebuilt despite rapid increases in health care and pension costs, continued education funding requirements, and other pent-up demands. Continued weakness in manufacturing and the slowing in real estate are not expected to derail economic recovery, although their effects may be more pronounced in certain states. Nonetheless, with revenue gains expected to moderate, fixed costs on the rise, mounting pressures for tax relief in many states, and expanding debt and infrastructure requirements, states will continue to face financial pressures.

For more information, see Fitch Research dated April 13, 2006, available on the Fitch Ratings web site at www.fitchratings.com. The report contains additional explanations of the Rating Outlooks and a credit summary for each state.

Fitch rates the following:

Alabama

--GOs 'AA';

--Rating Outlook Stable.

Alaska

--GOs 'AA';

--Rating Outlook Stable.

California

--GOs 'A';

--Rating Outlook Positive.

Connecticut

--GOs 'AA';

--Rating Outlook Stable.

Delaware

--GOs 'AAA';

--Rating Outlook Stable.

Florida

--GOs 'AA+';

--Rating Outlook Stable.

Georgia

--GOs 'AAA';

--Rating Outlook Stable.

Hawaii

--GOs 'AA';

--Rating Outlook Stable.

Illinois

--GOs 'AA';

--Rating Outlook Negative.

Iowa

--GOs 'AA';

--Rating Outlook Stable.

Louisiana

--GOs 'A';

--Rating Outlook Negative (removed from Rating Watch Negative).

Maine

--GOs 'AA';

--Rating Outlook Stable.

Maryland

--GOs 'AAA';

--Rating Outlook Stable.

Massachusetts

--GOs 'AA';

--Rating Outlook Stable.

Michigan

--GOs 'AA';

--Rating Outlook Negative.

Minnesota

--GOs 'AAA';

--Rating Outlook Stable.

Mississippi

--GOs 'AA';

--Rating Outlook Stable.

Missouri

--GOs 'AAA';

--Rating Outlook Stable.

Nevada

--GOs 'AA+';

--Rating Outlook Stable.

New Hampshire 

--GOs 'AA';

--Rating Outlook Stable.

New Jersey

--GOs 'AA-';

--Rating Outlook Stable.

New York

--GOs 'AA-';

--Rating Outlook Stable.

North Carolina 

--GOs 'AAA';

--Rating Outlook Stable.

Ohio

--GOs 'AA+';

--Rating Outlook Stable.

Oklahoma

--GOs 'AA';

--Rating Outlook Stable.

Oregon

--GOs 'AA-';

--Rating Outlook Stable.

Pennsylvania

--GOs 'AA';

--Rating Outlook Stable.

Rhode Island 

--GOs 'AA';

--Rating Outlook Stable.

South Carolina 

--GOs 'AAA';

--Rating Outlook Stable.

Tennessee

--GOs 'AA';

--Rating Outlook Stable.

Texas

--GOs 'AA+';

--Rating Outlook Stable.

Utah

--GOs 'AAA';

--Rating Outlook Stable.

Vermont

--GOs 'AA+';

--Rating Outlook Stable.

Virginia

--GOs 'AAA';

--Rating Outlook Stable.

Washington

--GOs 'AA';

--Rating Outlook Stable.

West Virginia 

--GOs 'AA-';

--Rating Outlook Stable.

Wisconsin

--GOs 'AA-';

--Rating Outlook Stable.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.