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Gov. Whitmer Announces First Fitch Credit Rating Upgrade in Nearly 10 Years as State Displays Strong Financial Position, Economic Growth; Fitch Ratings Upgrades Michigan’s Credit Rating from AA to AA+
July 22, 2022
Today, Governor Gretchen Whitmer announced that the state of Michigan’s strong financial position, prudent fiscal management and economic growth have prompted Fitch Ratings to boost the state’s credit rating from AA to AA+ with a “stable outlook.”
With the first Fitch upgrade since 2013, the strong credit rating is an affirmation the state is headed in the right direction, saving taxpayers money by lower borrowing costs for upcoming bond issues.
“Today’s credit rating upgrade is a testament to our hardworking people and innovative small businesses,” said Governor Whitmer. “Our unemployment rate remains low at 4.3%, last month we added 10,000 jobs, and last week I signed my fourth balanced, bipartisan budget, which did not raise taxes by a dime, delivered on the kitchen-table issues, and brought our rainy-day fund to an all-time high of $1.6 billion. Our economy is headed in the right direction, and we still have billions left on the table that I have proposed using to offer families real relief right now, including $500 inflation rebate checks, a rollback of the retirement tax, and a suspension of the state sales tax on gas. Michigan is on the move and the nation is taking notice. We will continue to say focused on growing our economy, creating good-paying jobs, and investing in every region of Michigan. Let’s keep getting it done.”
Fitch specified in its report that the updated credit rating reflects the state’s higher level of fiscal resilience and diversified economy compared to the previous decade, fiscally responsible budgeting and effort to address debt.
Fitch noted state of Michigan is managing economic risks by improving budgetary flexibility through increased fiscal reserves, paying down liabilities and practicing conservative budgeting and revenue forecasting. The state has boosted its resilience by replenishing its rainy-day fund, expanding cash balances held in its government-wide Common Cash Reserve, and maintaining structural balance, Fitch stated.
In addition, Fitch anticipates Michigan will take advantage of continued economic growth and boost the competitiveness of its workforce.
“Credit rating upgrades are difficult to come by,” said State Treasurer Rachael Eubanks. “With this upgrade, Wall Street has taken note of a track record of smart financial decisions and a thriving economy. A stronger credit rating tangibly benefits countless Michiganders, from better local school buildings to lower taxpayer costs for environmental projects.”
Prior to offering approximately $150 million in Michigan State Building Authority revenue bonds, Fitch reviewed the state’s economy, finances and other factors to determine a credit rating.
“Michigan’s decisions to invest in our students, our workforce, and the environment are balanced alongside purposeful actions to address long-term debt and responsibly invest our one-time funds and these financially prudent decisions are paying off,” said State Budget Director Chris Harkins. “This fantastic news means we are well-positioned to continue investing for our state’s current needs with an eye toward our future.”
Money from the bonds will pay for a portion of the authority’s facilities program, which includes construction of and improvements at various state universities, financing improvements to a veterans’ home run by the Michigan Department of Military and Veterans Affairs, and improvements to the Michigan State Capitol.
Because the Michigan State Building Authority’s bonds are an appropriation credit of the state, Fitch rated these bonds one notch below the general obligation credit ratings of the state of Michigan. The authority’s bonds were upgraded from AA- to AA by Fitch.
The Fitch report can be found here.
Ron Leix, Treasury, 517-335-2167