Taxpayers could save money after Michigan's credit rating upgrade
The credit-rating agency Standard & Poor’s announced Monday that they have upgraded Michigan's credit rating from AA- to AA. This change will allow the state to borrow money with a lower interest rate, which could potentially save Michigan taxpayers millions of dollars.
Nick Khouri is the State Treasurer. He says this is Wall Street’s recognition of efforts Michigan has been making for years to improve its economy. He says there will be both direct and indirect implications.
“The direct is, we're about to issue debt of $140 million and this will lower our interest cost,” he says. “That's the more direct and immediate impact. The indirect is that this is just a reflection on the state of Michigan and the policies and procedures we put in place the last few years so now the perception of the finances of Michigan across the country are improved.”
Khouri says this is the first time Michigan’s credit rating has changed since 2007.
A press release from the Department of Treasury says, “This is also S&P’s first state-level credit rating upgrade since the states of Hawaii and Tennessee in 2016.”
According to the same press release, “The S&P credit rating report stated the upgrade reflects Michigan’s demonstrated resilience following the Great Recession and improved credit fundamentals that they believe will persist through economic cycles. Additionally, the report recognized that the state has taken action to manage its economic volatility through increasing its reserves, structurally aligning its budgets and adopting pension reforms.”
The treasury says they expect grades from two other credit-rating agencies, Moody’s Investors Service and Fitch Ratings, within the next week.