The state of Maryland has continued to maintain its triple-A bond rating from all three New York rating agencies ahead of next week’s sale of $500 million in state bonds.
The state treasurer’s office announce the ratings and posted the reports from Fitch, Moody’s and Standard & Poor’s on its website.
“The citizens of Maryland will continue to save millions of taxpayer dollars as they benefit from lower interest rates warranted by these AAA ratings,” said State Treasurer Nancy Kopp in a statement.
Maryland is one 11 states with the highest bond rating. It has held the top rating from Standard & Poor’s for 54 years, from Moody’s for 42 years and from Fitch for 23.
There was nothing unusual in the reports. All three cite Maryland’s prudent fiscal management, its flexibility in reacting to revenue downturns, its forecasting process, its limit on debt and the short 15-year term of its bond.
Fitch and Standard & Poor’s call Maryland’s $12 billion in tax-supported debt moderate, while Moody’s calls it “high” among the states. But the raters have been making similar judgments for years.
All three note Maryland’s wealth, high incomes and highly educated populace.
As they have for several years, all three say Maryland will continue to be challenged by cutbacks in federal spending and its reliance on federal government employment.
Maryland’s pension liabilities and its failure to fully fund its annually required contribution to the pension fund are continuing cause for concern by the bond rating agencies.
They say Maryland retirement board underestimates its $19 billion pension liability because it overestimates its rate of return on investment at 7.65%, which is the main source of pension fund growth. But they also praise steps Maryland has taken since 2011 to reform the program by reducing benefits and increasing supplemental contributions, which the legislature has consistently tried to cut.
They hope Maryland will fulfill its promise to make the annual required contribution as determined by the actuary, which now stands at about $1.5 billion.