One rating agency has already downgraded the state's bond rating, based on the downturn in the global energy market, and officials have advised the other Wall Street rating houses are awaiting the outcome of the special session on the budget to determine whether to also impose downgrades.
So what happens if West Virginia's bond ratings are downgraded?
Revenue Secretary Bob Kiss said it's not unlike an individual who sees his credit rating slip, except that the numbers are much bigger than the few hundred dollars more it may cost to buy a car, or a few thousands more to buy a house.
"Having a lower bond rating amounts to tens of millions or even hundreds of millions of dollars in interest payments," Kiss said.
Taking a bond issue to market is not all that different from an individual going to the bank to get a loan, Kiss said.
"Banks are looking at your ability to repay, your income, your earnings potential," he said. "They're also looking at how you manage your fiscal affairs."
Similarly, when Standard and Poor's downgraded the state's bond rating from AA to AA-, it cited the ongoing downturn of the energy sector, but also continued to give the state a stable outlook, citing its "strong Rainy Day fund balances" and its "demonstrated ability to tackle large-scale financial challenges in the past."
Like the bank making a personal loan, the Wall Street bond brokers use bond ratings to classify risk, Kiss said.
"The bond rating, in a simplistic sense, represents the degree of risk somebody buying the bonds is exposing themselves to," he said, adding, "If the risk is higher, the people buying the bonds want to be paid more."
On a $300 million bond issue, higher interest rates of a few percent or even fractions of percent can amount to millions of dollars over the life of a 20- to 30-year bond.
Kiss noted that the state's bond rating affects what are called its subdivisions, raising interest rates not only for state agencies, such as Division of Highways and School Building Authority, but for counties and municipalities and Public Service Districts.
From contractors' perspectives, higher interest rates on bonds mean less money for projects.
"Obviously, the higher the interest rates, the less money that's available for projects, whether it's schools, water or sewer, or highways," said Mike Clowser, executive director of the Contractors Association of West Virginia.
Conversely, he noted that the Division of Highways last year took advantage of the state's then-strong bond ratings to refinance some of its 1996 Road bonds, resulting in $24 million in savings.
"The bottom line is, if interest rates go up, your only options are to extent the life of the payments or do less projects," he said. "Right now, everybody is trying to get every buck they can for projects."
According to the most recent Debt Position Report from the state treasurer's office, the state has a total outstanding bond debt of more than $1.5 billion, including more than $1.12 billion in School Building Authority, Higher Education Policy Commission and Economic Development Authority bonds; more than $227 million of Infrastructure bonds; and more than $168 million of Road bonds.
Kiss said one of the disturbing things about a ratings downgrade is that it can take years, even decades, to restore a strong credit rating.
He noted that when he first served in the House of Delegates in 1989, the state had an A+ rating, in the lowest of three rating tiers.
"West Virginia was in the bottom tier of the states at the time, and we got as high as a mid- to upper-level AA+," he said.
Reach Phil Kabler at philk@wvgazettemail.com, 304 348-1220, or follow @PhilKabler on Twitter.