According to a new Fitch Ratings report, the 2015 U.S. public finance outlook is stable despite continued fiscal, economic and regulatory uncertainty. Fitch also notes that the 2015 outlook for the U.S. nonprofit hospitals and healthcare sub-sector is negative.

“The acceleration of U.S. economic growth stimulated by oil price declines will support revenue growth at the state and local levels and improve revenue generation for public enterprises,” said Rich Raphael, managing director, U.S. Public Finance Group.

“Although uncertainty around healthcare reform persists, the level of mergers and acquisitions in the healthcare sector should remain brisk as providers seek to increase size and scale to gain needed efficiencies in the new reimbursement environment,” said Olu Sonola, senior director and head of research in the U.S. Public Finance and Global Infrastructure Groups.

Fitch notes that pension funding ratios are improving for state and local governments as capital losses are now largely phased out of multiyear smoothing mechanisms. However, some state and local governments still have significant unfunded pension liabilities pressuring their credit quality. Fitch expects reporting of pension liabilities using the new GASB requirements to provide useful additional information including some additional tools to assess plan credit risk, although analytical challenges will remain.

To view the full Fitch Ratings report, click here.