Speaker Osborne comments on state’s improved credit rating, legislature’s efforts to create long-term economic success across commonwealth
Frankfort, Kentucky (May 12, 2023) – House Speaker David Osborne issued the following statement regarding Kentucky’s historic upgrade by Fitch Ratings:
“Kentucky’s upgrade by Fitch Ratings is great news, but comes as no surprise to those of us working to enact the kind of policies that create long-term economic success. Throughout the past six years, the House and Senate have passed responsible budgets that provide for our state’s needs, implemented a plan to eliminate the individual income tax, cut unnecessarily burdensome regulations, and positioned our state for record economic investment.
“However, it is extremely disappointing to see the Governor claim credit for the results of efforts he has not only refused to participate in, but actively tried to stop. His attempt to take credit is even more disingenuous because he vetoed so many of the policies that led to this upgrade.
“Nevertheless, the House Majority remains committed to ensuring Kentuckians have economic opportunity. We recognize that our work is far from over as it takes time to fix a century’s worth of poor public policy driven by politics.”
Here is what the Governor’s office released this week on the rating:
Gov. Beshear: Major Credit Agency Boosts Kentucky’s Financial Outlook for First Time
State-level credit rating upgrade from Fitch Ratings means lower costs for taxpayers
FRANKFORT, Ky. (May 12, 2023) – Today, Gov. Andy Beshear announced that his administration has secured the first-ever state-level credit rating upgrade from the major credit rating agency Fitch Ratings, which moved Kentucky’s rating up from AA- to AA.
In general, the rating is a measure of the state’s ability to pay debts and the overall health of Kentucky’s economy.
The Governor said the increased confidence in Kentucky’s financial outlook will mean lower costs for taxpayers on the state’s investments in critical infrastructure projects – like roads, bridges and schools – which help move the state forward while helping our families.
“This is the first state-level credit rating increase Kentucky has received in 13 years, and it’s the first-ever state-level upgrade for Kentucky by Fitch,” Gov. Beshear said. “Kentuckians are celebrating today’s news because it proves that this administration has been a good steward of taxpayer dollars; and this is one more positive sign that Kentucky’s economy is booming, and that our fiscal house is in order.”
Fitch Ratings started rating Kentucky in 2014. The new Fitch report also shows that Kentucky teacher and state employee pension obligations are being fully met and can be counted on by public servants.
The state lease appropriation rating, which the majority of Kentucky’s bonds carry, is moving to AA- from A+. This credit rating increase follows improvements last year in the state’s financial outlook, which both Fitch Ratings and S&P Global Ratings ranked as positive.
Kentucky’s strong financial position, budgetary discipline, continued commitment to fully funding pensions – including appropriations in excess of the actuarially required amount – and record levels in the Budget Reserve Trust Fund are reflected in this credit upgrade.
Fitch’s notice to investors, which was released Thursday evening, said, “Fitch’s upgrade of Kentucky’s IDR to ‘AA’ from ‘AA-’ reflects material improvements to Kentucky’s fiscal reserves since 2020 as a result of improved budgetary discipline and a post-pandemic surge in tax collections now in its third year. More disciplined budgeting practices have allowed Kentucky to use surplus revenues to boost state fiscal reserves, increasing its overall financial resilience. The upgrade of Kentucky’s IDR also factors in better funding practices related to long-term liabilities, particularly public pension plans. Fitch believes the shift to making actuarially-determined annual pension contributions has enhanced Kentucky’s budgetary flexibility and that these improvements are sustainable.”
This upgrade from Fitch Ratings enhances the state’s economic momentum.
Since the beginning of his administration, Gov. Beshear has announced the creation of approximately 46,000 full-time jobs and more than 850 private-sector new-location and expansion projects totaling $25.9 billion in announced investments.
The Governor also secured the best two-year period in state history for economic growth.
In 2021, the commonwealth shattered every economic development record in the books. Private-sector new-location and expansion announcements included a record $11.2 billion in total planned investment and commitments to create a record 18,000-plus full-time jobs across the coming years.
That momentum continued strongly into 2022 with 248 new-location and expansion announcements totaling 16,000 full-time jobs behind nearly $10.5 billion in new investment.
The robust job creation has been accompanied by rising wages across the commonwealth. The average incentivized hourly wage in 2022 was $26.78 before benefits, the second-highest mark since 2010 and an 11.5% increase over the previous year.
Gov. Beshear also announced the two largest economic development projects in state history. In September 2021, Gov. Beshear and leaders from Ford Motor Co. and SK Innovation celebrated a transformative $5.8 billion investment that will create 5,000 jobs in Hardin County. And in April 2022, the Governor was joined by leadership at Envision AESC to announce a $2 billion investment that will create 2,000 jobs in Warren County. These announcements solidify Kentucky as the EV battery production capital of the United States.
Site Selection magazine placed Kentucky second nationwide and first in the South Central region for its annual Governor’s Cup ranking for 2022, which recognizes state-level economic success based on capital investments.
Gov. Beshear’s administration is projected to post the four highest years of budget surpluses in Kentucky history, and the state’s rainy-day fund has a record balance of $2.7 billion.