Kentucky’s credit rating outlook is improving thanks to a stable financial footing coming out of the pandemic, a result of many policies backed by the Kentucky Chamber.
On Tuesday, Fitch Ratings, one of the big three credit rating agencies, issued a periodic report which upgraded Kentucky’s financial outlook from negative to stable. Fitch cited the state’s economic recovery from the pandemic downtown as a key reason for the revision. “The Outlook revision to Stable from Negative reflects Kentucky’s solid economic recovery to date from the pandemic trough, and the commonwealth’s ability to navigate the ongoing budgetary implications without materially weakening its fiscal resilience,” the report stated.
This upgrade is positive news for the state’s fiscal future and, as stated in the report, is the result of many Chamber-backed policies. Specifically, Fitch cited measures such as fully funding state pension systems based on more realistic assumptions, tax reform, and paying down Kentucky’s federal unemployment insurance debt. All of these policies were aggressively pursued by the Kentucky Chamber in recent legislative sessions and are now paying dividends for the Commonwealth.
“After many years of Kentucky seeing its credit downgraded again and again, we are encouraged to see this new positive development. The Kentucky Chamber has been the leading voice on issues related to the Commonwealth’s economic recovery and has continuously advocated for policies to improve the state of our pension systems to ensure long term stability. We applaud the work of lawmakers who have helped enact this change and look forward to continued recovery and growth in Kentucky,” Kentucky Chamber President and CEO Ashli Watts said.
Gov. Andy Beshear touted the rating and stated it further indicates Kentucky is poised to be a leader in the post-COVID economy.
House Speaker David Osborne released a statement Wednesday stating the Fitch Ratings upgrade is proof that we are on the right path, but we must recognize that the economic uncertainty created by the pandemic and the state’s response to it is far from over.
The report did cite several areas needing attention in Kentucky if we want to continue improving the Commonwealth’s fiscal outlook. Below-average population growth and low educational attainment, for example, were cited as threats to long-term growth. The report also raised concerns regarding Kentucky’s labor market. As noted in a recent Chamber op-ed, Kentucky’s labor force participation rate ranks as one of the lowest in the nation. These issues, and others, are key focal points of the Chamber to continue driving economic growth and improving Kentucky’s business competitiveness.