Maryland's and Virginia's Bond Ratings Could Be Cut This Fall

The credit ratings of Virginia and Maryland could be tied to the congressional panel set up to reduce the deficit.

With so many federal workers throughout the region, the economies of both Virginia and Maryland are closely tied to the federal government. The ratings agency Standard & Poors decided this week not to downgrade the two states' credit ratings but that could change this fall.

John Sugden, a director at S&P, says analysts will now be monitoring the congressional panel charged with finding $1.5 trillion in either budget cuts or revenue increases.

"We will be analyzing what the impact of these reductions will be on each state, and in some cases the states might be affected differently than others," Sugden says. "It really depends on what the cuts are and which parts of the federal government are reduced and how that is implemented."

Sugden says the credit rating agency will be looking to see if the panel recommends deep cuts to programs such as Medicaid, which provide funding for programs directly to the states.

He adds that how state governments react to the cuts will also factor in to whether they maintain their AAA credit ratings.