Moody’s Investors Service (NYSE: MCO) has upgraded New York state’s credit rating to Aa1 with stable outlook, representing New York’s highest rating from Moody’s since 1964.
The office of Gov. Andrew Cuomo made the announcement in a news release distributed on Monday.
Moody’s Investors Service upgraded New York’s general-obligation bond rating to Aa1 from Aa2 and moved the state’s outlook to stable.
In addition, Moody’s also upgraded the state’s personal income-tax revenue, sales-tax revenue, Local Government Assistance Corporation (LGAC), and certain other state-backed bonds to Aa1 from Aa2, Cuomo’s office said in the release.
In its report, Moody’s points to New York’s “sustained” improvements in fiscal governance, the “strength” of the recent economic recovery, a “strong financial position reflected in improved reserves, and reduced spending growth in line with growth in the state’s economic capacity,” according to the release.
The current state budget holds spending growth below 2 percent for the fourth consecutive year. Moody’s “stable outlook” reflects its expectation that the state will “preserve and improve” upon the gains it has made in governance and its financial position, Cuomo’s office said.
The governor’s office provided an excerpt of the Moody’s report in its news release.
“New York has reversed historic financial management patterns and now benefits from a sustained record of on-time budgets, contained spending growth, and lack of reliance on external borrowing for liquidity purposes,” Moody’s Investor Services said in its report. “The shift to more moderate spending increases signals a more sustainable approach to state finances.”
The Moody’s report “represents everything we’ve been talking about for the past four years,” Cuomo said in the release.
“This upgrade is in part a product of four on-time budgets, our work to make the state work once again, and our focus on economic development. All of these efforts came together in a credit ratings upgrade, an inarguable sign of progress,” Cuomo said.
The Moody’s upgrade is a “positive statement” on the direction of the state’s economic climate, Robert Simpson, president and CEO of CenterState CEO, said in a statement issued on Monday.
“Our state is starting to realize the benefits of on-time budgets and slower rates of spending growth. We are optimistic about this new rating and the message it sends to businesses looking to expand or relocate here,” Simpson said.
Keeping state spending increases to less than two percent over the past four years helps create “a more competitive business environment,” Simpson added.
Contact Reinhardt at ereinhardt@cnybj.com