Utah maintains AAA credit rating from all major rating agencies, saves taxpayer dollars

Utah Gov. Gary Herbert and Treasurer David Damschen announced that S&P Global, Moody’s Investors Service and Fitch Ratings have reaffirmed the State’s AAA credit rating – the highest rating a state can receive.

“I am proud that Utah is once again among only a handful of states to receive a AAA rating by all three rating agencies. This impressive accomplishment and Utah’s broad economic success can be largely credited to our conservative approach to budgeting, debt management and other financial policies,” Gov. Herbert said. “In Utah, we are thorough and collaborative in our fiscal management, and I applaud the Utah team for this collective achievement.”

Agencies base their ratings on a range of financial, economic, managerial and institutional factors. Utah’s history of continuous AAA bond ratings dates back to 1965, when S&P initiated its rating system. The State’s AAA rating with Moody’s commenced in 1973 and with Fitch Ratings in 1992.  

“Maintaining the highest credit ratings saves Utah taxpayer dollars by allowing us to finance large projects at the lowest interest rates available. High ratings also signal to investors that the State can and will meet its financial obligations to pay both interest and principal,” Treasurer Damschen said. “These ratings are indicative of good financial management practices and a strong economy.”

As cited in the rating reports, the agencies’ rationales for Utah’s ratings include:

  • A diverse and rapidly growing economy, with a young, well-educated workforce, job growth across most major sectors and an unemployment rate that is among the lowest of the 50 states.

  • Strong growth in Utah’s broad-based revenues, reflecting the breadth of the economy and its strong growth potential.

  • Continued good financial management and structurally balanced financial operations, including proactive budget adjustments to maintain adequate rainy-day reserves, conservative estimates of revenue growth and ample liquidity with no need to access external markets for cash flow.

  • A conservative approach to debt, which is closely managed through both constitutional and statutory formula.

  • Low and quickly amortizing debt, despite the demands of population growth. Combined tax-supported debt per capita of $808, or 1.6% of state GDP and 2.0% of total personal income.

  • Low long-term liabilities, with the combined burden of net tax-supported debt and unfunded pension liabilities equal to 3.9% of personal income, compared to the 6% median for U.S. states.

  • A strong governmental framework, with a constitutional requirement to maintain a balanced budget and a fiscal policy that allows for changes to the revenue structure and program spending by a simple majority of the legislature.

  • A demonstrated ability to take prompt action to maintain budgetary balance as well as to restore fiscal flexibility during growth periods, while managing pressures associated with a growing population.