S&P Global Ratings says that the 22 Louisiana parishes that were impacted by record flooding in August will experience varying degrees of economic and financial stress. This is because local governments all have different credit strengths and weaknesses, and the flooding affected many parishes differently. S&P explained that overall, between federal, state and insurance reimbursements, the total costs related to the disaster will likely be fully mitigated. If so, that would be viewed as a credit positive. However, delays in collecting these funds could spill across several fiscal years and affect near-term budgetary performance and reserve levels. To the extent that local governments have enough liquidity to cover tax-base declines or financial losses, their credit quality will likely not deteriorate.
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