(THE CENTER SQUARE) – Ohio taxpayers could save a little money on billions of state borrowing for projects after Fitch gave the state its highest investment grade in more than 40 years.
Fitch Ratings, a leading credit rating provider, upgraded Ohio’s long-term issuer default rating to “AAA” from “AA+,” Gov. Mike DeWine said.
Rob Moore, principal at the economic policy analysis group Scioto Analysis, said the rating moves Ohio to a group of 16 other states with the top rating, elevating it from a middle-tier state to a top-tier state in terms of credit ratings.
“A higher credit rating means lower interest rates for big projects like road construction and public works projects, which means Ohio will need to pay less for these projects,” Moore said. “Ohio’s total transportation budget, which captures much of the projects it takes on debt for, is a little over $4 billion a year. This bump-up in Ohio's credit rating from Fitch could end up saving taxpayers a little bit of money by allowing the state to borrow at a lower rate. It also could make it easier for the state to finance more projects without going over its constitutional limit on taking on debt.”
The rating is the first AAA with Fitch, which began rating Ohio’s credit in the 1990s and represents the highest rating for Ohio’s IDR by one of the three main rating agencies since 1979.
“This historic move by Fitch to upgrade Ohio's rating to 'AAA' comes as a result of our economic policies and fiscal stewardship that have brought measurable results," DeWine said.
One key for the increase, according to Fitch, was the state legislature directing one-time revenues, including federal COVID-19 relief funds, toward nonrecurring expenditures. The state has focused much of its American Rescue Plan Act money toward infrastructure and replenishment of the unemployment trust fund.
The rating company called the state’s debt levels conservatively managed and said it had a careful approach to financial operations.
