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December 5, 2023

State treasurer sees strong odds for Maine credit upgrade

Capital dome under a blue sky Photo / Jim Neuger "Maine's financial profile, from our organic state revenues to our reserves, has never been better," State Treasurer Henry Beck told Mainebiz.

After Fitch Ratings affirmed Maine’s credit rating and boosted its outlook from “stable” to “positive,” State Treasurer Henry Beck is upbeat about the chance of a general credit upgrade — even though Maine has no immediate borrowing plans.

Photo / Office of the Maine State Treasurer
Henry Beck

“Maine’s financial profile, from our organic state revenues to our reserves, has never been better,” Beck told Mainebiz, saying Fitch’s improved outlook “improves our potential for a general upgrade.”

In its action, Fitch affirmed the "AA" rating on long-term bonds issued by the state and assigned an "A+" rating to the $137.8 billion in bonds to be issued by the Maine Health and Higher Education Facilities Authority.

In its rosier outlook, Fitch cites Maine's improved budgetary management and the state’s progress in restoring fiscal flexibility by rebuilding its reserves to historically high levels. The move comes less than three months after Maine’s Budget Stabilization Fund, commonly referred to as the Rainy Day Fund, reached a record $968.3 million, the maximum allowed under state law.

In a Dec. 1 news release about the Fitch move, Gov. Janet Mills said her administration will continue to work with state lawmakers to “keep Maine in a strong fiscal position.”

Moody's, S&P

The two other credit rating agencies are equally bullish on Maine.

In May, Moody’s Investors Service and S&P Global Ratings both affirmed their strong credit ratings on Maine’s general obligation debt. 

At that time, Moody’s also affirmed its "Aa2" rating and upgraded its outlook from “stable to positive,” while S&P affirmed its "AA" rating and “stable” outlook.

Beck said the chances for an upgrade by any of the agencies depend on Maine’s ability to meet goals related to demographics, as noted by Moody’s and S&P in their May reports.

Moody’s, for example, mentioned “sustained population growth” as a factor that could lead to an upgrade, while S&P referred to strengthening long-term demographic projections, which Beck said is another way of saying a lower median age.

“We need population growth that will concurrently address our workforce needs in the business sectors of health care, defense and clean energy production,” he said.

No immediate borrowing plans

Despite the vote of confidence by all three ratings agencies, Beck said that Maine has no immediate borrowing plans.

“For the first time in recent memory, we have completed all general obligation borrowing authorized by the Legislature and voters,” he added. “The current budget does provide money to pay for a bond of $50 million in June 2026, but even that is only hypothetical because no bond proposals have been approved.”

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