Two weeks removed from the special legislative session, Montana received some welcome news on Monday: Its sterling bond rating has been renewed.
However, softness in the state’s revenue collection and its economic dependence on natural resources offset some of its strengths, according to the S&P Global Ratings report.
“I’m pleased we were able to maintain Montana’s fiscal health,” Gov. Steve Bullock said on Monday. “We’ll continue to be mindful with taxpayer dollars, not spend more than we take in and begin to put these challenging budget times behind us.”
Both parties claimed at least a partial victory after the conclusion of the special legislative session, called to close a $227 million state general fund budget and revenue shortfall.
The move also pleased S&P, which affirmed its ‘AA’ rating on the state of Montana’s general obligation bonds. It also affirmed the state’s ‘A’ rating on the Montana Facility Finance Authority’s revenue debt.
The outlook on all ratings is stable.
“The state has favorable characteristics that we view as supporting credit quality over the long term, including its strong budget management framework and low debt levels,” S&P wrote. “Montana’s longer term economic growth projections are also strong compared with the U.S.”
According to S&P, the solid rating reflects the state’s low tax-supported debt burden, its requirement of a balanced budget and its low unemployment rate compared to the nation.
Playing against the state, S&P said, was the state’s softness in revenue collection, its continued economic dependence on natural resources, agriculture and tourism, and its low pension-funded ratio.