Michigan Gets First Fitch Credit Rating Upgrade in Nearly a Decade
Because of Michigan’s strong financial position, fiscal management and economic growth, the state has received a boost to their Fitch credit rating for the first time since 2013, Gov. Gretchen Whitmer announced Friday.
Fitch Credit Ratings are ratings given to corporations, banks, leasing companies, insurers and local and regional governments on their ability to meet financial commitments. The highest Fitch Credit rating is a “AAA” and the lowest is “D.”
Michigan’s Fitch Credit rating increased from an AA to an AA+ with a “stable outlook,” according to the Executive Office of the Governor.
“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…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.”
According to a report by Fitch, the updated credit rating reflects Michigan’s higher level of “fiscal resilience and diversified economy compared to the previous decade, fiscally responsible budgeting and effort to address debt.” The report also noted that the state is managing economic risks by improving budget flexibility through increased fiscal reserves, paying down liabilities, and practicing conservative budgeting and revenue forecasting.
Fitch states that they anticipate the state will take advantage of continued economic growth and boost the competitiveness of its workforce.
Before offering approximately $150 million in Michigan State Building Authority revenue bonds, Fitch reviewed Michigan’s economy, finances and other factors to determine a credit rating. According to the Executive Office of the Governor, because the bonds are an appropriation credit of Michigan, Fitch rated the bonds one notch below the general obligation credit ratings of the state and the bonds were upgraded from an AA- to an AA.
The bonds will pay for part of the Michigan State Building Authority’s facilities program, which includes construction and improvements to various state universities, financing improvements to a veterans home ran by the Michigan Department of Military and Veteran Affairs and improvements to the State Capitol.