The federal government’s serious financial challenges haven’t put a damper on Tennessee’s economic success over the last several years, a fact that was showcased during official meetings with the nation’s three major bond rating agencies this month.
The meetings, which took place in New York in mid-October, were led by Republican Governor Bill Haslam, state Constitutional Officers Justin P. Wilson, Tre Hargett, and David H. Lillard, Jr., along with House Speaker Beth Harwell (R–Nashville) and House Majority Leader Gerald McCormick (R–Chattanooga).
Last year, Tennessee was rated AAA by Fitch Ratings and Aaa by Moody’s Investor Services — the highest rankings given. In addition, the state was rated AA+ by Standard and Poor’s, which is the second highest rating available.
“We have the lowest debt ratio of any state, which is one major indicator of our financial health,” Comptroller Wilson said. “We have a history in Tennessee of borrowing comparatively little money and repaying it quickly. That kind of financial discipline is one of the hallmarks of our state.”
Tennessee’s credit rating helps determine how much interest state and local governments must pay when they borrow money to fund projects such as new schools and roads.
“Tennesseans can take great pride in how our real gross domestic product (GDP) has grown at a faster rate than the United States’ GDP for three consecutive years,” Secretary Hargett said. “This can be attributed to the productivity of our hard-working citizens and the investments we continue to make in education, modern technology and infrastructure. In fact, when government is excluded, the private share of our GDP compares favorably to other triple AAA-rated states, demonstrating how our economy is better equipped to weather cuts in government spending.”
“Long-term liabilities such as pensions and other entitlements are among the biggest financial challenges facing governments today,” Treasurer Lillard said. “In Tennessee, we recently reformed our pension system to reduce the state’s liability over time while producing a sufficient and sustainable benefit for retirees.”
The rating agencies are expected to announce Tennessee’s updated ratings in the next several weeks.