DIVISION OF THE BUDGET
KATHY HOCHUL, GOVERNOR
ROBERT F. MUJICA JR., DIRECTOR
April 18, 2022
GOVERNOR HOCHUL ANNOUNCES UPGRADE TO NEW YORK STATE’s CREDIT RATING BY MOODY’s INVESTORS SERVICE
Governor Kathy Hochul today announced the recent upgrade of various credit ratings for New York State by Moody’s Investors Service, including the upgrade of New York’s issuer rating and ratings on general obligation, personal income tax revenue and sales tax revenue bonds, to Aa1 from Aa2. In justifying the upgrade, Moody’s cited New York State’s “agile financial management that has resulted in balanced or nearly [balanced] budgets projected through the state’s five-year financial plan.”
“These upgrades show the strength of New York’s financial management as we continue to build back stronger than before,” Governor Hochul said. “Moody’s cited New York’s ‘agile financial management,’ and this confirms the value of my administration’s success in negotiating a fiscally responsible budget that builds our reserves and reduces liabilities. We will continue to monitor the financial uncertainties of the COVID pandemic, and continue to take bold, responsible steps to create a brighter future for generations of New Yorkers.”
In a recent report, Moody’s writes, “Recognizing its need for a financial buffer to counter the volatility inherent in the state’s economic and revenue structure, it has channeled some of those resources into expanded reserves, reductions in certain outstanding liabilities, such as postponed pension contributions, and risk reduction … These actions point to the role of strong governance in triggering the upgrade.”
Governor Hochul’s Administration has been successful at managing an unprecedented and complicated fiscal environment in the wake of the COVID pandemic.
In April 2020, the Enacted Budget Financial Plan projected large out-year budget gaps that averaged $16.5 billion annually. The most recent Financial Plan, issued in January and amended in February, showed no budget gaps in any year, along with steadily increasing reserves reaching, for the first time ever, 15% of State Operating Funds in FY 2025 – a standard widely regarded by economists as necessary to weather future unforeseen emergencies. Principal reserves today are 2.7 times higher than when the pandemic began.
The FY 2023 Enacted Budget maintains all the principal reserve deposits recommended by Governor Hochul in her proposed Executive Budget. Total reserve deposits over the Financial Plan period (FY 2022 – FY 2025) will total $15.3 billion.
The State has managed the influx of one-time federal funds in a fiscally responsible manner as well. In addition to focusing spending on one-time, non-recurring investments the Hochul Administration has allocated the use of $12.75 billion in American Rescue Plan aid over the course of four years in order to avoid creating a “fiscal cliff.”