North Carolina’s financial stability in 2017 stands in stark contrast to 2011, when Republicans gained control of the state General Assembly and began repaying a $2 billion debt from last decade. By repaying the debt ahead of schedule and saving $1.8 billion in rainy day reserves, North Carolina has made a $4 billion swing from debt to savings in six years, while lowering sales tax rates, income tax rates, and corporate tax rates over the same period.
North Carolina State Treasurer Dale R. Folwell announced Thursday that the nation’s three major bond rating agencies – Fitch, Moody’s and S&P – all reaffirmed the state’s “AAA” bond rating, making North Carolina one of only 12 states to obtain a unanimous top-tier evaluation.
The ratings announcement included praise for North Carolina’s recent “conservative financial operations,” “demonstrated controls over spending” and “rebuilt rainy day fund.”
“North Carolina’s unanimous “AAA” bond rating is a powerful endorsement of the Republican-led General Assembly’s smart spending strategies, record savings reserves and unyielding commitment to our state’s financial security,” said House Speaker Tim Moore.
“As one of only 12 states to obtain an “AAA” bond rating by all three major agencies, North Carolina can save taxpayers tens of millions of dollars through lower interest rates, continue to attract rapid job growth and safeguard our citizens with one of the most fiscally sound governments in the United States.”
The fiscal scores, all of which forecast stable financial outlooks for North Carolina’s “AAA” ratings, were in preparation for the upcoming sale of general and limited obligation bonds scheduled to be sold later this month, taking advantage of lower interest rates to reduce interest costs for taxpayers.
While the Moody’s and S&P ratings were issued in copyrighted press releases, Fitch’s analysis was made public (attached) and included a glowing confirmation of the state’s financial strategies:
- “North Carolina's 'AAA' GO bond rating reflects its low liabilities, conservative financial operations and long-term prospects for continued economic expansion and diversification.”
- “The state has rebuilt its rainy day fund, another source of financial flexibility.”
- “North Carolina has a very strong ability to close budgetary gaps during a cyclical downturn, based on its demonstrated controls over spending.”
- “Stronger economic growth has taken hold, contributing to revenue growth that exceeded forecast in each of the last three fiscal years, including in fiscal 2017.”
- “Recent economic growth in North Carolina has been accelerating and future growth is expected to be stronger.”
- “Pension funding is among the strongest of the states.”
In April, Moody’s Investor Service also praised a new North Carolina law that bolsters the state’s Savings Reserve Account, calling House Bill 7 Strengthen Savings Reserve a “credit positive” commitment.
Led by Senior Appropriations Chairman Nelson Dollar (R-Wake), the new law will help “maintain a steady level of reserves” and “improve the state’s financial flexibility and its ability to respond to future contingencies,” according to Moody’s Investor Service.