...Integral to Scenario Analysis: Fitch's U.S. state and local government through-the-cycle (TTC) analysis, as detailed in "Exposure Draft: U.S. Tax-Supported Rating Criteria" incorporates the use of Fitch's Revenue Sensitivity Tool (RST). The RST provides broad order of magnitude guidance of how tax-backed issuers' revenues might be affected in relation to the general macroeconomic/cyclical scenario specified. This builds on previous work performed and published by Fitch on the cyclicality of tax-backed issuers. Sensitivity, Not Forecasting Tool: The RST is not a forecasting tool but rather provides a plausible range of possible outcomes for TTC analysis. The RST generates a revenue scenario estimate that is empirically based, objective and intuitive and allows for uniformity/consistency in terms of the input variable being stressed (e.g. GDP). The RST also provides a means for better understanding how issuer revenues have evolved over the cycle and relative to peers. Significant Cyclicality...
