The Standard and Poor’s credit rating agency has upgraded Connecticut’s bond rating from stable to positive for the second time in two years. It means the state can now borrow money at a lower rate.
The credit upgrade is a reward for Connecticut’s fiscal prudence and signals to business that the state is a place to grow and invest, said Governor Ned Lamont.
Although the upgrade is good news, UConn economist Fred Carstensen said it may be short-lived. That’s because the state’s huge budget surplus is based on capital gains windfalls from high earners on Wall Street, he said.
“There’s a very real danger that within two or three years we are going to be back in the face of some significant budget deficits. And then the credit ratings are going to be downgraded,” Carstensen said.
In the meantime, Connecticut’s surplus will continue to grow to almost a billion dollars by the end of the fiscal year next month, said Jeff Beckham, the state's budget director. The huge surplus will enable the state to pay down its unfunded pension liabilities by $3.6 billion this fiscal year, he said.
