Last week, the S&P upgraded its bond rating for Arkansas, according to the Department of Finance & Administration. Bond ratings for states determine how much interest the state will pay when it issues bonds and has to pay them back.
In an interview with Talk Business & Politics, Sen. Jonathan Dismang, R-Beebe, and the Senate’s chair for the Joint Budget Committee, said improving the bond rating is a result of years of saving and adding to the state’s reserve fund.
“Something I’m incredibly proud of. I am proud of my Senate colleagues because we all kind of dug in and made that a priority dating back 10 years ago,” he said.
Dismang added that the state will have to pay less money for construction projects and other projects that require raising money through bonds.
The S&P report cited the state’s management of its budget for the reason for upgrading its credit rating.
“A strong government framework , prudent budget management practices that support timely and considerable expenditure adjustments to help address potential revenue shortfalls, and a low debt burden support our ‘AA’ issuer credit rating on Arkansas,” the report said.
Currently, Arkansas’ reserve funding includes $1.529 billion in Catastrophic Reserve and $2 billion in Restricted Reserve, including $710 million in the newly-created Arkansas Reserve Fund.
The S&P rates Arkansas with a AA rating and Moody’s, a credit rating firm, confirmed this rating.
Gov. Sarah Sanders, a Republican, said she appreciated the S&P improving the grade of the state’s bond rating.
“Here in Arkansas, we’re managing to do the impossible, cutting taxes while still making needed investments and growing our record reserve funds,” she said.
Lawmakers have said they want to hold a special session this year to lower the income tax rate, depending on how large the state’s budget surplus is at the end of the current fiscal session.
