It is indeed good news that one of the Big Three credit rating agencies recently upgraded Connecticut’s general obligation bonds, for the first time in 20 years, and the administration of Gov. Ned Lamont deserves due credit.
Moody’s Investor Service has upgraded the state’s roughly $16 billion of debt from an A1 rating to Aa3, as reported by Hearst Connecticut Media, pointing to the state’s “numerous governance improvements,” a rebuilt rainy day fund, and “good financial performance” during the pandemic.
The Aa3 rating also places Connecticut in the “high quality” bond category, rather than “upper medium” grade.
Then again, it would be premature to overlook our “heavy debt and retiree benefit liabilities, which are among the highest of the states,” Moody’s noted, or our “lagging economy and recent consecutive years of population loss.”
Nor should we forget that the past two decades were a time when the state, at times, struggled to balance a budget. Indeed, in 2017 we didn’t have a budget at all until several months past the deadline. That was also a period when the state’s bonds actually received downgrades.
“This report should build confidence in our business community and our residents,” Lamont said in a statement, “as it provides outside validation that Connecticut continues to make prudent financial decisions that set the state up for growth now and into the future …”
State Treasurer Shawn Wooden called the upgrade a sign that the state is “a good bet for investors.”
No doubt it will help us sell state bonds, and certainly Lamont, Wooden and state residents have cause to feel upbeat. But it may be too early to say, as Lamont did, that “we are emerging as a financial leader among the states.”
As good as the news from Moody’s may be, Connecticut still has fiscal issues to tackle.