ATL Standard

Governor Brian P. Kemp announced today that S&P Global Ratings has reaffirmed Georgia's "AAA with a stable outlook" assessment for the state's creditworthiness. The announcement came at the start of an international trip to promote Georgia as a leading state for business and job creation.

Due to the absence of new general obligation bonds issued for the current fiscal year, FitchRatings and Moody’s Investors Service did not issue formal reports on Georgia's bond ratings. Both agencies had previously awarded Georgia their highest possible ratings in their last analyses.

"Once again, Georgia's responsible, conservative approach to budgeting has allowed our state to receive affirmation of the highest possible bond rating," said Governor Kemp. "In the face of economic uncertainty on the national level due to bad policies coming out of Washington, D.C., I could not be more proud of our shared focus with the legislature on careful budgeting and maintaining a strong economic development pipeline that keeps Georgia a safe bet for any and all job creators."

S&P cited several factors contributing to their rating scores, including positive employment trends, strong budgetary performance, high reserve levels, and consistent funding of obligations. They also noted Georgia's willingness to make politically difficult decisions and its balanced approach to primary revenue sources.

The S&P Global Ratings report highlighted that for a third consecutive year, Georgia generated a multi-billion operating surplus and maintained very strong reserve balances at its statutory limit of 15 percent of previous year net revenues. Despite expectations for near-term softening of broader U.S. economic activity and revenue conditions, S&P believes Georgia will carry this momentum through fiscal 2024 and into fiscal 2025.

The report also emphasized Georgia's favorable population growth trends and its ability to attract diversified business developments within its large economic base. It projected annual growth rates that would match or outpace national averages.

Georgia revised its five-year revenue projections (2024-2028), incorporating conservative revenue growth assumptions: 1.6% in fiscal 2025, 3.5% in fiscal 2026, 4.0% in fiscal 2027, and 4.3% in fiscal 2028. While these assumptions are deemed reasonable by S&P, they will continue monitoring long-term revenue effects from tax reductions on predictability and structural balance.

The 'AAA' GO rating reflects:

- Very strong governmental framework with authority to align expenditures with revenue projections.

- Very strong financial management with sustainable processes for monitoring performance.

- A large and diverse economic base benefiting from favorable population growth trends.

- Strong budgetary performance with high reserves levels.

- Adequate pension funding discipline despite relatively low combined pension funding levels compared with peers.

The stable outlook incorporates expectations that Georgia will maintain structurally balanced budgeting amid potential near-term economic conditions changes while making timely adjustments if necessary.

However, S&P cautioned that significant financial pressures could lower the rating if they result in substantial reserve spend-downs or weakened debt metrics due to long-term liability growth related to pensions or retiree health care costs.

S&P views the state's debt burden as low-to-moderate with an expectation of stable-to-improving debt metrics over the next several years due to rapid amortization schedules and planned cash-funding for capital improvements in fiscal 2025.

The full report is available here.