How Using Rainy Day Funds Affects State Credit Ratings

Brian Skinner State Fiscal & Economic Policy

Agency officials say smart management and design contribute to high marks

Credit Ratings

 

Pew – Jeff Chapman, Airlie Loiaconi & Sheanna Gomes – August 24, 2020

Credit ratings are critically important for state governments. A low rating may suggest to investors that a state is more likely to default on the debt it issues. That makes it more costly for a state to borrow money and adds strain to its budget. A robust rainy day fund, however, can have a significant positive impact on a state’s credit rating . . 

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