BOSTON – State Treasurer Deborah B. Goldberg announced today, April 14, that the Commonwealth of Massachusetts has received a credit upgrade from the rating agency, Standard & Poor’s (S&P), moving the Massachusetts general obligation bonds to AA+ (stable outlook) from AA (positive outlook). Additionally, S&P raised their long-term ratings to AAA from AA+ on the Commonwealth Transportation Fund (CTF) outstanding revenue bonds.
In its notice to investors, S&P said, “The upgrade reflects our view that the Commonwealth’s commitment to strengthen its budget management practices supported by the state’s improved reserves and strong economy will be sustained through near-term recessionary pressures.”
“We are extremely pleased that the S&P credit rating is now aligned with the other ratings for the Commonwealth’s General Obligation bonds,” said State Treasurer Deborah B. Goldberg. “The Governor’s proposed Fiscal Year 2024 budget sent a strong signal that the state’s commitment to prudent financial management continues across Administrations. Our Rainy-Day Fund Balance has reached an historic high of approximately $7.1 billion with additional deposits forthcoming, providing excellent coverage for when, no doubt, it will rain again. And we have made progress toward tackling and improving the state’s pension liability, lowering the actuarial rate of return to 7% and adopting the new three-year funding schedule.”
“I’m thrilled to see S&P recognize the work that we have been doing with the Legislature and Treasurer Goldberg in just a short time to continue to build the state’s reserves, while also investing in programs and people to ensure that our economy remains strong and vibrant,” said Governor Maura Healey. “We will continue to lean on these best practices to put Massachusetts in the strongest position possible for short- and long-term success.”
In addition to a sustainable fiscal year 2024 budget proposal built on sound financial principles, the Healey-Driscoll administration filed a supplement budget last month that would make an additional $100 million transfer to the pension fund. Done in coordination with partners in the House and Senate, this would enable Massachusetts to fully pay down pension liabilities attributable to the 2015 Early Retirement Incentive Program ahead of schedule.
“This upgrade demonstrates how our commitment to responsible budget management can pay dividends to the people of Massachusetts,” said Administration and Finance Secretary Matthew J. Gorzkowicz. “It is also proof that a state like Massachusetts can prudently build its reserves, cover long-term liabilities and still invest in priorities like child care, schools, roads, and housing while balancing its books.”
State general obligation ratings are largely based on several factors: the state’s economy, governmental framework, budgetary performance, financial management, and debt and liability profile. Massachusetts’ strong financial management practices and Budget Stabilization Fund levels are generally viewed as credit strengths for the Commonwealth.