Press Release by Office of Gov. Gary R. Herbert and Office of the Utah State Treasurer
Utah Gov. Gary Herbert and Treasurer David Damschen today announced that S&P Global, Moody’s Investors Service and Fitch Ratings have reaffirmed the State’s AAA credit rating – the highest rating a state can receive.
“Utah once again stands out as a leader in the nation for its broad fiscal and economic success, which can be largely credited to our conservative approach to budgeting, debt management and other financial policies,” Gov. Herbert said. “In Utah, we are thorough and collaborative in our fiscal management. We have worked closely with the legislature to adhere to the principles of fiscal discipline and budgetary restraint, making our state one of only a handful to receive a AAA rating by all three rating agencies. I applaud the Utah team for this collective achievement.”
Agencies base their ratings on a range of financial, economic, managerial and institutional factors. Utah’s history of continuous AAA bond ratings dates back to 1965, when S&P initiated its rating system. The State’s AAA rating with Moody’s commenced in 1973 and with Fitch Ratings in 1992.
“We’re seeing overwhelming demand from investor’s for our bonds,” Treasurer Damschen said. “This is in clear response to the strength of our credit, which allows us to finance large projects at the lowest interest rates available in the market and ultimately save big for Utah taxpayers.”
The rating affirmations coincide with today’s legislatively authorized $128 million general obligation (GO) bond transaction, which will finance transportation projects. During the December special legislative session, the governor and legislature jointly approved additional appropriations for the prison project, which eliminated the need to borrow for the prison project this year and significantly reduced today’s transaction from the initially-planned $375 million – increasing savings on prison project costs.
As cited in the rating reports, the agencies’ rationales for Utah’s strong ratings include:
- Strong government framework, with a constitutional requirement to maintain a balanced budget and fiscal policy that allows for changes to the revenue structure and program spending by a simple majority of the legislature.
- Conservative fiscal and debt management policies that include constitutional or statutory limits on appropriation growth and debt issuance to keep debt levels low and quickly amortizing, despite demands of population growth.
- Continued leadership in the management and funding of long-term liabilities for pensions and other post-retirement benefits, leading to low fixed costs relative to its peers and contributing to the state’s good budgetary flexibility.
- Successful and timely action when addressing budgetary imbalances.
- Reserve funds that accumulate based on a statutorily determined formula.
- Job growth across most major sectors, including solid growth in trade, transportation and utilities – the state’s largest employment sector.
- An unemployment rate that is typically well below the national average.
- Annual real GDP growth that has continuously surpassed the nation’s since 2013 and is expected to continue to outperform the nation due to a favorable industry mix and strong population growth.