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PHOENIX — The credit rating company Moody’s Investors Service yesterday announced it is upgrading Arizona’s credit rating from Aa2 to Aa1, the second-highest rating Moody’s offers. The upgrade recognizes Arizona’s continued strong economic growth as well as the state’s efforts to balance the budget, reduce debt and boost the Rainy Day Fund to record levels.
Moody’s rates states on a 21-grade scale, from C to Aaa. Arizona’s upgrade to Aa1 is the second-highest rating. With a balanced budget and vastly improved fiscal and economic outlook, Arizona’s rating has increased 3 grades since 2009, including 2 grades since 2015; this is now the highest issuer rating Arizona has ever received from Moody’s. Arizona is also the only state to have received two ratings upgrades from Moody’s in the past five years.
“Today’s rating boost is further validation that Arizona is going in the right direction — and that smart policies do matter,” said Governor Ducey. “Across our state, these policies are making a difference. Jobs are growing. Our budget is balanced. We are paying down debt. Our Rainy Day Fund is the highest it has ever been. We have more people moving here than anywhere in the country. And we are investing in the things that matter, such as K-12 education, public safety and infrastructure. This is a winning game plan, and my thanks goes out to all the legislators who have partnered with us to right our budget, reduce unnecessary regulations and ensure the world knows that Arizona is open for business.”
Moody’s cited Arizona’s continued economic growth, the rebuilding of its reserves and debt reduction in its ratings announcement:
“Arizona significantly increased its budget-basis and GAAP-basis reserves, in large part due to the growth of its diverse economy since the recession over the last five years,” the company said in its announcement. “At the same time the state has steadily paid down debt incurred prior to and during the recession, while limiting new borrowing, reducing an already-low debt burden. Other key factors in the Aa1 rating include below average pension liabilities and demonstrated budget discipline."
Smart, conservative budgeting
Since 2015, Arizona has turned a $1 billion deficit into a $1 billion surplus, while making responsible, fiscally conservative investments in the things that matter. Since 2015, Arizona has added $4.5 billion to K-12 education while ensuring new investments are sustainable and protected and without any tax increases.
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