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Governor Ned Lamont


Governor Lamont: Wall Street Says 2019 Brought Reliability and Stability to Connecticut’s Finances

(HARTFORD, CT) – In his remarks at today’s State Bond Commission meeting – the last one of 2019 and only the fourth held during his administration – Governor Ned Lamont noted the financial turnaround Connecticut saw during the past year, pointing to the growing list of credit rating agencies that are reporting on the state’s improving outlook and saying that this year marks an about-face in improving its national reputation.

“I was elected on the commitment that I would be hyper focused on righting our fiscal ship, and in doing so changing the narrative about this great state,” Governor Lamont said. “Despite being faced with a $3.7 billion deficit, we brought stability to the state’s finances without raising tax rates or cutting municipal aid and educational funding. Equally important was curtailing the state’s borrowing and restructuring the state’s economic development strategy to incentivize growth without jeopardizing taxpayers’ dollars. As hard as this year has been, that work is showing results, and Wall Street is taking notice.”

2019 Year in Review: Statements from Credit Rating Agencies and Outlets

March 19: Standard & Poor’s improves the outlook on Connecticut’s credit rating from “stable” to “positive,” marking the first positive outlook or rating improvement by a rating agency in 18 years.

  • “The outlook change to positive reflects the increased likelihood that Connecticut will preserve recently replenished reserves at what we view as strong levels, and that the state’s high debt levels could moderate if the governor’s proposal for a new ‘debt diet’ is carried through into policy,” S&P Global Ratings credit analyst David Hitchcock said. (Source: CT News Junkie)

July 9: Fitch rates Connecticut GO refunding bonds A+

  • Analytical Conclusion:Fitch said its Connecticut credit rating incorporates “expectations for relatively flat economic performance that will continue to challenge the state in matching revenues to expenditures, despite recent improvement in financial performance.”
  • Operating Performance: “Despite the challenges posed by its slow recovery from the Great Recession, the state’s fiscal management has generally improved in recent biennia, with a greater reliance on structural solutions and continued full actuarial pension contributions.” (Source: Fitch Ratings Report)

July 9: Moody’s assigns A1 rating to Connecticut GO bonds

  • Ratings Rationale: Moody’s said its GO rating “reflects Connecticut’s high income levels, strengthened governance, and significantly improved liquidity, offset by high liabilities and the resulting high fixed costs for debt service, pension, and post-employment benefits relative to the state’s budget.”
  • Ratings Outlook: “Connecticut’s outlook is stable, reflecting high level of budgetary reserves and the state’s strong provisions to promote fiscal discipline, which pair redressing elements of its high leverage position and requiring GAAP-based budgeting.” (Source: Moody’s press release)

December 11: Bloomberg says stable pension outlook and robust rainy day fund mend Connecticut’s finances

  • “The government is being rewarded by Wall Street for taking steps to stabilize its finances. Unlike Illinois and New Jersey, Connecticut now pays the full required annual contribution to its pensions. The state also extended to 30 years its time frame to repay its retirement-fund debt, resulting in lower and steady annual payments even if it increases the overall cost.”
  • “Connecticut has gone from trading like a triple B to an A rated bond that’s consistent with our internal view,” said Guy Davidson, chief investment officer of municipal investments at Alliance Bernstein. “They’re a better credit than they had been in previous years and the market has rewarded them for it.” (Source: Bloomberg News)

December 17: Moody’s says Connecticut is better prepared for a downturn than in 2007

  • “Connecticut is fiscally better prepared for a downturn than in 2007. Despite the lack of an obvious catalyst for a strong recovery in the next economic cycle, governance and economic changes will help shield the state budget from economic volatility. New budget rules have contributed to a strong rainy day fund, which is at an all-time high, and will dampen fluctuations in general fund revenue. The finance sector, meanwhile, has become less volatile, reducing the severity of economic swings.”

December 17: NASBO’s Fiscal Survey of the States highlights improved fiscal stability in Connecticut

  • Report notes that Connecticut’s budget growth is below the national average, while its rainy day fund is almost twice the national average. (Source: NASBO)

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