Governor Whitmer Announces Credit Ratings Agencies Reaffirm Michigan’s Competitive Economy, Responsible Budgeting Practices
July 17, 2023
Today, Governor Gretchen Whitmer announced that the state of Michigan’s strong financial position, competitive economy and responsible budgeting practices have prompted the three main international ratings agencies to reaffirm the state’s credit ratings.
“Michigan is on the move, with low unemployment, a diversifying economy, and strong fiscal fundamentals,” said Governor Whitmer. “All three ratings agencies reaffirming our credit ratings proves that the work we are doing is working. Michigan delivers for working families and is open for business. The Michigan Legislature just passed a balanced, bipartisan budget bringing our rainy-day fund to an all-time high and setting aside funding in a new reserve fund for schools. Our economic development tools continue to help us bring home projects creating thousands of good-paying jobs and revitalizing communities across the state. Together, we will continue getting things done to grow our economy, make a difference for families and businesses, and ensure anyone can ‘make it’ in Michigan.”
Prior to the issuance of approximately $390 million in Michigan Building Authority bonds, the credit ratings agencies reviewed the state’s economy, governance, finances and other factors to determine a credit rating.
Moody’s Investors Service reaffirmed their Aa1 rating with a “stable outlook,” noting the state has effective financial forecast practices, budgetary reserves at record levels, and an increasingly diverse economy. Michigan’s governance practices make the state likely to respond rapidly to developing economic or fiscal downturns, Moody’s stated.
Fitch Ratings reaffirmed their AA+ rating with a “stable outlook,” stating that Michigan has a high level of financial resilience and low long-term liability burdens. The state’s economy is broad based and marked by stronger diversity than before the last pre-pandemic recession, Fitch noted.
Even further, Standard & Poor’s reaffirmed their AA rating with a “stable outlook,” adding that Michigan has enacted good budget practices, increased its “rainy day” fund, and is likely to have strong economic performance. Michigan has established itself as a leader in testing autonomous vehicles and is benefiting from a strong research presence, S&P provided.
“Great credit ratings with a consistently stable outlook have a tangible impact on the everyday lives of Michiganders,” State Treasurer Rachael Eubanks said. “It means the state of Michigan can borrow money at a lower interest rate to clean up the environment, support higher education facilities or other state needs, creating savings that can be used on other important projects. The state’s credit rating also directly benefits local school districts, many of which utilize the state’s strong credit to issue bonds for their own school building projects. A great credit rating is also a testament by Wall Street to our noted track record of smart financial decisions and a thriving economy.”
Money from the State Building Authority bonds will pay for a portion of the facilities program, which includes various state university and community college facility projects, the new Caro Center State Psychiatric Hospital administration and hospital facilities and refinancing existing debt for interest rate savings.
Because the Michigan State Building Authority’s bonds are an appropriation credit of the state, the credit rating agencies rated these bonds one notch below the general obligation credit ratings of the state of Michigan.
CNBC Ranks Michigan a Top 10 State for Business
Recently, CNBC released their rankings of America’s Top States for Business in 2023. Michigan cracked the top 10 for only the second time since the list was launched, powered by strong job growth, advanced manufacturing leadership, and a low cost of doing business and living.
CNBC lists several criteria they use to determine a state’s ranking. This includes “ten broad categories of competitiveness” and “86 metrics.” These are broad categories businesses use when making site selection decisions and states invest in to lower costs and improve quality of life for residents and businesses alike.
Michigan comes in at 10th overall, while ranking higher in two categories and making strides in others, including:
- 6th for cost of doing business, up from 9th last year.
- 7th for cost of living, up from 12th last year.
- 12th for technology and innovation, up from 15th last year.
15th for business friendliness, up from 20th last year.
Additional details about the Top 10 ranking can be found in a recent news release from Governor Whitmer.