Gov. Andy Beshear announced the first state-level credit rating upgrade in 13 years from the major credit rating agency Fitch Ratings, which moved Kentucky’s rating up from AA- to AA.
In general, the rating is a measure of the state’s ability to pay debts and the overall health of Kentucky’s economy.
The Governor said the increased confidence in Kentucky’s financial outlook will mean lower costs for taxpayers on the state’s investments in critical infrastructure projects – like roads, bridges and schools – which help move the state forward while helping our families.
“This is the first state-level credit rating increase Kentucky has received in 13 years, and it’s the first-ever state-level upgrade for Kentucky by Fitch,” Gov. Beshear said. “Kentuckians are celebrating the news because it proves that this administration has been a good steward of taxpayer dollars; and this is one more positive sign that Kentucky’s economy is booming, and that our fiscal house is in order.”
Fitch Ratings started rating Kentucky in 2014. The new Fitch report also shows that Kentucky teacher and state employee pension obligations are being fully met and can be counted on by public servants.
The state lease appropriation rating, which the majority of Kentucky’s bonds carry, is moving to AA- from A+. This credit rating increase follows improvements last year in the state’s financial outlook, which both Fitch Ratings and S&P Global Ratings ranked as positive.
Kentucky’s strong financial position, budgetary discipline, continued commitment to fully funding pensions – including appropriations in excess of the actuarially required amount – and record levels in the Budget Reserve Trust Fund are reflected in this credit upgrade.
Fitch’s notice to investors, which was released Thursday evening, said, “Fitch’s upgrade of Kentucky’s IDR to ‘AA’ from ‘AA-’ reflects material improvements to Kentucky’s fiscal reserves since 2020 as a result of improved budgetary discipline and a post-pandemic surge in tax collections now in its third year. More disciplined budgeting practices have allowed Kentucky to use surplus revenues to boost state fiscal reserves, increasing its overall financial resilience. The upgrade of Kentucky’s IDR also factors in better funding practices related to long-term liabilities, particularly public pension plans. Fitch believes the shift to making actuarially-determined annual pension contributions has enhanced Kentucky’s budgetary flexibility and that these improvements are sustainable.”
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