Fitch affirms credit rating for Idaho

Thanks to “broad powers over spending and revenues” and other factors, the Gem State has a strong credit rating .

On June 14, Fitch Ratings affirmed Idaho’s Issuer Default Rating (IDR) at AAA. Additionally, the credit rating agency affirmed the state’s building authority bonds series at AA+.

“Idaho’s ‘AAA’ IDR reflects the state’s broad powers over spending and revenues, strong reserve levels, low long-term liability burden and expected solid long-term economic growth,” Fitch Ratings reported on its website. “Fitch believes the state is well-positioned to absorb multiple rounds of recent tax cuts and dedicated spending allocations from the general fund, given Idaho’s prudently managed budget with significant one-time spending that rolls off to create fiscal capacity.”

The rating agency added that the “AA+” long-term rating on the building “bonds is based on the additional optionality for debt service paid from annual legislative appropriations.”

Fitch stated that it expects Idaho’s long-term liability burden to remain low despite more debt being incurred with a transportation bond program and schools facilities program. The agency also stated the longer-term revenue trend is likely to exceed the national GDP increase, but the state is still subject to economic cycles.

“Thanks to our diligent and unrelenting focus on reining in state spending and saving healthy amounts for rainy days, Idaho has maintained the AAA rating from Fitch for four straight years, and I am very proud,” Gov. Brad Little said in a statement. “The rating means we’ll save Idaho taxpayers millions of dollars on future projects. This is what good government is all about. I appreciate my partners in the Legislature for sharing my passion for maintaining a lean state budget and stable rainy-day funds. Our partners in the private sector, too, have done a tremendous job propelling Idaho’s economy forward.”

Part of what has led to the state’s AAA rating is its ability to build up reserves during times of economic expansion and willingness to make cuts when needed, Fitch stated, including mid-year adjustments that could address areas of weakness.

With that, Fitch pointed out that negative factors could lead to a negative rating, including “changes to budget management that materially weaken financial resilience, such as a failure to adjust to the effects of recent tax policy changes such that structural budgetary imbalances emerge; unexpected reversal of strong population, economic and revenue growth.”

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