by Christian Wade
A Wall Street credit rating firm has bumped up Connecticut’s score for its general obligation bonds, citing the state’s ever improving financial outlook.
Standard & Poor’s announced Monday, it is upgrading Connecticut’s general obligation bond credit rating from A+ (positive) to AA- (stable), as the state prepares to issue more than $900 million in bonds next week for school construction and other public projects.
“The upgrade on the state’s GO debt reflects our view of Connecticut’s sustained positive financial results and building of high reserve levels during a recent period of economic and revenue growth,” Standard & Poor’s wrote in a note to investors.
The ratings agency said the upgrade also reflects the state’s “commitment to structural budget balance and curbing future growth of the state’s very high debt, pension, and other postemployment benefit liabilities, which we expect will continue in future biennial budgets.”
The upgrade follows increases last year by several other Wall Street credit rating agencies, including Moody’s, Fitch and Kroll. Prior to 2021, the state’s credit rating hadn’t been upgraded since 2001.
Gov. Ned Lamont said the upgrade shows Connecticut is “getting its mojo back” and will mean lower costs for major public projects, which will save taxpayers millions of dollars.
“Connecticut taxpayers should celebrate today’s news,” he said in a statement. “It is a signal to the businesses and residents that our state is on the right financial path, that we have shown a commitment to putting our fiscal house in order, and we are continuing to make significant progress to address our pension and other post-employment benefit liabilities.”
Lamont is expected to ask lawmakers to allow the state to continue to deposit tax collections from capital gains and dividends into the state’s “rainy day” reserve fund.
A temporary law authorizing the required tax revenue transfers expires next June, and Lamont has vowed to extend the policy to continue building up the state’s reserves.
The rating agency cited those reforms in its report, saying the state’s credit improvement is “underscored by the executive branch’s announcement and intent to extend statutory financial controls in the next biennial budget proposal, which supports our view that the state remains more firmly committed to these provisions for the foreseeable future.”
Last week, state budget officials said Connecticut will close out the fiscal year, which ends June 30 with a higher than expected surplus, estimated at $1 billion.
Another $1.8 billion in surplus funds was identified in a separate state account, according to Lamont’s office.
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