Kroll Bond Rating Agency (KBRA) has downgraded Connecticut’s credit rating from “AA” to “AA-,” making it the third rating agency to downgrade the state since May.
KBRA based the downgrade on the state’s “inability over the last two years to maintain balanced financial operations with significantly reducing its budget reserve fund.”
The firm also revised its outlook from “negative” to “stable,” partly due to Connecticut’s recent downward revisions of revenue projections.
Connecticut’s deficit for the just-completed fiscal year was reported as $315.8 million on July 1. The state is projected to have only about $90 million, or about one-half of 1 percent of annual operating expenses, in its emergency reserve; comptroller Kevin P. Lembo recommends a reserve of 15 percent.
Standard & Poor’s and Fitch Ratings both downgraded Connecticut to “AA-” in May, citing similar concerns. The fourth major ratings agency, Moody’s, has not changed its rating from its “Aa3,” though it maintains a “negative outlook” for the state.
“This action by Kroll reinforces Connecticut’s need to address its current and long-term fiscal challenges with precision and in a manner that has positive, sustainable impact,” said state Treasurer Denise L. Nappier.