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Gov. Whitmer Announces Credit Rating Outlook Boost as State Continues Economic Jumpstart and Puts Michigan Back to Work
July 7, 2021
LANSING, Mich. - Governor Whitmer today announced that the state of Michigan's improving economy and multi-billion-dollar revenue surplus coming out of the COVID-19 pandemic have prompted S&P Global Ratings to improve the state's credit rating outlook from "negative" to "stable." The State of Michigan recently announced new revenue projections taking the state from a nearly $3 billion deficit to a $3.5 billion surplus. The move is an affirmation the state is headed in the right direction, saving taxpayers money by lowering borrowing costs for upcoming bond issues.
"This credit rating boost, the second we have received in the last month, is a sign of growing confidence in Michigan's communities and small businesses," said Governor Gretchen Whitmer. "Thanks to our early efforts to respond to COVID-19, we are poised to emerge from the pandemic stronger than ever and continue our economic jumpstart. With billions in federal stimulus and our $3.5 billion state budget surplus, we have a tremendous opportunity to raise wages, invest in schools and small businesses, and uplift families. I look forward to continuing my collaboration with legislature, local communities, and small businesses to put Michigan first. Together, we can get it done."
In its announcement, S&P noted the outlook revision reflects improved economic prospects, generating better than budgeted financial results, and continued budget stabilization.
"Michigan has emerged from the most recent recession better than originally anticipated, with a monthly unemployment rate currently below the national average, after initially being much higher; strong demand for its manufacturing products, particularly as vehicle sales have grown; and smaller draws on its rainy-day fund than initially expected," S&P Global Ratings said Wednesday. "Improved revenue forecasts and additional federal aid indicate that the state, in our view, will likely maintain adequate reserves for the near future."
S&P affirmed the state's AA general obligation rating and AA-minus rating on appropriation debt and Michigan State Building Authority fixed-rate revenue bonds. The outlook action also impacted transportation fund gas tax and truck line fund bonds that carry AA-plus ratings and Detroit Convention Facility Authority debt rated AA. All have ties to the state's rating.
Michigan's fiscal picture stabilized due to federal relief that bolstered the economy and increased tax revenue collections. Gov. Gretchen Whitmer's $67 billion budget proposal restores the reserve draw. Michigan expects a $3.5 billion revenue surge through the next fiscal year due to its accelerating economic recovery.
During the May Consensus Revenue Estimating Conference, the Michigan Department of Treasury and state House and Senate Fiscal Agencies agreed to revenues $3.5 billion more than anticipated in January. Federal stimulus programs and improving public health situation were attributed to the increase.
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