(Media release from the Office of Governor Brian Kemp):
While beginning an international trip to promote Georgia as the No. 1 state for business, Governor Brian P. Kemp on Wednesday announced that the state has again secured the highest ratings of AAA with a stable outlook from each of the three main credit rating agencies: FitchRatings, Moody’s Investors Service, and S&P Global Ratings. Of the states that issue general obligation bonds, only ten currently meet this standard.
“I am proud Georgia’s responsible, conservative approach to budgeting has again allowed our state to secure the highest possible bond rating,” said Governor Kemp. “In the face of economic uncertainty on the national level due to bad policies coming out of Washington, D.C., our shared focus with the legislature on careful budgeting and strong economic development pipeline means Georgia will be a safe bet for job creators for years to come. These ratings enable us to save taxpayers millions of dollars each year with low interest rates for borrowing and they highlight the strength of our workforce and stability of our state economy. They also serve as the latest reminder of the results we are delivering every day to hardworking Georgians.”
Georgia’s upcoming sale of general obligation bonds will fund $671 million in capital projects and, if interest rates permit, also refund outstanding bonds to achieve debt service savings on a portion of the state’s outstanding debt. The majority of the bond proceeds will fund K-12 education, higher education, public safety, and economic development projects. The Peach State’s AAA ratings will enable the state to sell its bonds at the lowest possible interest costs when it takes bids for those bonds on June 27. The credit rating agencies’ individual ratings, which are AAA, Aaa, and AAA, respectively, are the highest ratings possible, and indicative of sound fiscal management.
Fitch, Moody’s, and S&P cited the strength of Georgia’s economy with a positive employment trend, full funding for the state’s rainy day fund, a balanced approach to primary revenue sources, and consistent funding of obligations as factors contributing to their rating scores.
Bond Rating Agency Report Excerpts
“Georgia’s AAA Issuer Default Rating reflects the state’s proven willingness and ability to maintain fiscal balance and a broad-based, growth-oriented economy that supports solid revenue gains over time.
“Growth in population and jobs has outpaced the nation over several decades, driving steady economic gains, and providing a solid foundation for future growth.
“Georgia’s long-term liability burden is low, and overall debt management is conservative.
“The state is well positioned to deal with economic downturns with exceptionally strong gap-closing capacity due to its broad control over revenues and spending, coupled with prudent reserve-building practices.”
Moody’s Investors Service:
“Credit strengths supporting the State of Georgia Aaa stable issuer rating include: (1) Economic and population growth that outperforms the nation; (2) Strong fiscal management including structurally sound budgets and wide financial flexibility; (3) Robust reserves and liquidity that will likely remain high; and (4) Low overall leverage and fixed costs from debt, pension and OPEB liabilities.
“Moody’s Analytics ranks Georgia among the top ten states for forecasted employment growth over the next three years, driven by strong demographics and a diverse industrial mix.
“Georgia’s total leverage from debt, pension, OPEB and other long-term liabilities will remain low given manageable additional borrowing compared to revenue growth and a pension burden that is roughly half of the median for US states.
“Georgia’s fiscal governance framework and financial management practices are stronger than most states. Statutory and constitutional provisions have helped keep financial operations largely balanced and have encouraged strong recovery from previous economic downturns.”
S&P Global Ratings:
“The ‘AAA’ GO rating reflects our view of Georgia’s:
* Very strong governmental framework, with the authority and a demonstrated willingness to make politically difficult decisions to align expenditures with revenue projections.
* Very strong financial and budgetary management, with well embedded, and likely sustainable processes for monitoring performance and planning for future needs.
* Diverse economy, with ongoing economic development projects that we believe will help sustain future growth.
* Generally strong budgetary performance, with a commitment to increasing and maintaining reserves during economic growth and a commitment to restoring reserves if necessary to manage revenue shortfalls.
* Adequate pension funding discipline, coupled with a moderate-to-low debt burden and modest upcoming debt plans relative to its rapid debt amortization, which are unlikely to change our view of the state’s debt profile.”