June 10, 2024

Improved Credit Ratings To Save State Hundreds Of Millions

For more than half a decade, Connecticut’s leaders have worked to improve the state’s financial position, which has culminated in approximately $8 billion in additional pension payments made since 2019 and a rebuilt “rainy-day fund” for the state. This activity has led to a positive trend statewide financially, with prominent credit agencies continually raising the state’s credit rating outlooks that will save taxpayers hundreds of millions of dollars in years to come.

Most recently, in late May, both Fitch and Moody’s credit agencies took action to raise the state’s general obligation bond outlook from stable to positive. This is part of a continuing trend; since 2021, all of the major credit agencies have upgraded the state’s ratings, some several times.

These increased credit ratings are a result of having several billions of dollars on hand in case of economic challenges, paying off more old pension fund debt, and keeping the “rainy day fund” full.

Credit rating boosts are benefiting the state’s budget now and will do so for years to come. They have already saved us hundreds of millions of dollars due to refinancing and will save us hundreds of millions more in the future.

The newly formed ratings provide Connecticut with better rates when it sells bonds to fund major projects, including grants to municipalities and nonprofits, housing projects, economic development and more. That will save state residents hundreds of millions of dollars over time when factoring in these investments, reducing the cost burden on future generations in the state. This also supports businesses and organizations working with municipalities.

“Connecticut has the security of knowing our financial position is strong and getting stronger,” said Senate Majority Leader Bob Duff (D-Norwalk). “These rating upgrades are continuing to positively impact our state and will shave millions of dollars off interest on future projects, which will have a long-term beneficial effect for our communities.”

Seven years ago, Connecticut had just $213 million available in the “rainy day fund” at the end of the 2017 fiscal year. Today, our state stands much stronger for the consistent commitments to fiscal prudence leaders have achieved. At the end of this fiscal year the state is projected to have $4.1 billion in the rainy day fund.

Posted by Joe O’Leary