Kroll Bond Rating Agency upgraded its long-term outlook for Connecticut’s transportation infrastructure bonds last week, moving the state’s Special Tax Obligation Bond rating from AA+ to AAA, its highest rating.
In a Friday press release, the New York-based agency said the upgrade recognized the stabilization of fuel tax receipts after the conclusion of a gas tax holiday that ran from March of 2022 to April of 2023, as well as a more diverse slate of taxes including motor vehicle taxes and a highway use tax.
The agency also pointed to the state’s bond covenant, a set of fiscal guardrails extended by Gov. Ned Lamont and the state legislature for at least five years prior to the passage of the most recent biennium budget.
“Such a covenant is a relative rarity in the broader category of special taxes,” Kroll Bond Rating Agency wrote in the press release.
In a press release Tuesday, the governor said the upgrade reflected his administration’s dedication to improving Connecticut’s transportation infrastructure networks.
“This credit rating increase shows that investors recognize that commitment, as well as our sound bipartisan fiscal management practices,” Lamont said. “With the assistance of the Infrastructure Investment and Jobs Act, a healthy Special Transportation Fund, and lowered borrowing costs, we are poised to undertake the most significant transportation transformation in generations.”
State Treasurer Erick Russell said the rating upgrade would make Connecticut’s planned transportation projects more cost-effective to undertake.
“This is yet another positive outcome of our state’s strong bipartisan culture of fiscal responsibility.,” Russell said. “The budgetary reforms put in place have stabilized state finances and resulted in a flurry of credit ratings increases in recent years. Not only does this encourage international investment in our state, but it makes it more affordable for us to invest in ourselves as we continue to build the future we want.”
Meanwhile, Sen. Tony Hwang, a Fairfield Republican who serves as a ranking member on the legislature’s Transportation Committee, said the rating upgrade sent a clear message that Connecticut had an opportunity to step up infrastructure investments.
“We must continue to expand the skilled-labor employment pipeline from technical high schools to this vital industry,” Hwang said. “We must get more projects up and running and ‘shovel-ready.’ Let’s put the construction industry to work and grow our economy.”