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Governor Lamont Announces Connecticut Receives Improved Credit Rating Outlooks From Fitch and Moody’s [[link removed]]

Posted on May 30, 2024

(HARTFORD, CT) – Governor Ned Lamont today announced that he has received notification from two credit rating agencies – Fitch and Moody’s – that they are each raising Connecticut’s general obligation bond outlook from “stable” to “positive.”

“Once again, investors are taking note of the significant progress Connecticut continues to make to grow our economy and reduce our fixed cost growth,” Governor Lamont said. “Connecticut residents and businesses directly benefit from this improved outlook in the form of lowered borrowing costs. Over the past six years, we have made approximately $8 billion in additional pension payments and rebuilt our rainy-day fund, providing about $700 million savings in the general fund, while also reducing the legacy burden on our children and grandchildren.”

“This is certainly positive news for our state, and this is yet another example of the benefits of a kitchen table approach to state budgeting – recognizing what our families can afford,” Office of Policy and Management Secretary Jeffrey Beckham said. “In meetings with credit rating agencies last week, they were impressed with our ability to control our fixed costs. While this is positive news, we cannot rest on our laurels, and we must continue to improve our state’s long-term financial position.”

In its notice to investors that was released today, Fitch said:

“The Outlook revision to Positive reflects Fitch’s view that Connecticut is likely to see medium-term revenue growth at or slightly above Fitch’s long-term expectations for national inflation, while the state maintains its renewed commitment to budgetary guardrails that constrain expenditure growth.”

Fitch also noted:

“Connecticut’s robust fiscal resilience is bolstered by statutory mechanisms supporting accumulation of reserves including setting aside in the budget reserve fund (BRF) volatile revenue collections over specific thresholds and a required excess margin of revenues over budgeted spending. Budget management powers and sophisticated fiscal monitoring, including frequent revenue and budget forecasting, allow the state to quickly identify budget underperformance and address emerging gaps.”

In its notice, Moody’s said:

“The outlook revision to positive is driven by the state’s prudent financial policies that have led to increased budgetary reserves and consistent pension contributions that have begun moderating the state’s very high unfunded pension liabilities. With continued adherence to these policies, the state is expected to maintain solid reserve levels and further reduce leverage metrics.”

Since 2021, all four of the major credit rating agencies have upgrades Connecticut’s general obligation bond ratings.

Read on CT.gov [[link removed]]

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