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Connecticut’s credit quality, relative to its peer states across the country, is the best it’s been in nearly a decade, according to Hartford-based investment manager Conning Inc.
Connecticut ranked 40th in Conning’s latest “State of the States” report, which is the highest score the state has received since late 2011, when it ranked 37th.
The improvement could turn institutional investors’ heads, but it also comes as Conning downgraded all 50 states overall, assigning them a negative outlook due to the ongoing fallout from the COVID-19 pandemic.
“While state credit quality in 2019 was the strongest it had been in a decade, the COVID-19 pandemic will force states to make difficult budget decisions and possibly dip into reserves to address shortfalls,” Conning’s report said.
Conning said it previously issued declining or negative outlooks for states between fall 2016 and spring 2018, as well as during the 2009-2011 financial crisis.
Connecticut’s improved reserves was one reason for its recent climb in the long-running rankings, which Conning has issued in the spring and winter annually, but recently consolidated to once per year. As a result of legislative mandates, the state’s Rainy Day fund has grown to a record $2.5 billion, which put Connecticut in a better position to address the economic slowdown than it was headed into the Great Recession, Conning said.
The Rainy Day balance provides “a budgetary cushion as [the state] grapples with high fixed costs and potential revenue declines,” it added.
Since 2012, Connecticut has mostly rattled around in the bottom five of the Conning rankings.
Conning’s updated methodology for the latest ranking assesses 13 metrics, from housing prices and per-capita debt to business tax climate and pension funding levels.
Other strengths for Connecticut in the latest ranking included tax revenue growth of more than 10% between 2018 and 2019 and high personal income levels.
Weaknesses included high per capita debt, low pension funding levels, a small population loss between 2018 and 2019, and stagnant housing prices.
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The Hartford Business Journal 2025 Charity Event Guide is the annual resource publication highlighting the top charity events in 2025.
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