These 12 states now have a better credit rating than the US government

Matthew FoxAug 3, 2023, 22:12 IST

Business Insider

The Nashville skyline.Sean Pavone/Getty Images

Fitch's recent downgrade of US debt to AA+ means there are now several states that have a higher credit rating than the federal government.
The downgrade from Fitch comes 12 years after S&P downgraded US credit to AA+.
These are the 12 states that have higher credit ratings than the US.

There are a dozen US states that now have a higher credit rating than the federal government after Fitch downgraded the US credit rating to AA+ from AAA earlier this week.

Fitch's downgrade comes 12 years after S&P lowered the US government's debt rating to AA+, and both downgrades are centered around similar concerns: political brinkmanship surrounding the debt ceiling that often leaves the government on the verge of an unprecedented default before a last-minute political fix is made.

Also not helping the US government is its ballooning debts, growing interest payments on said debts, a reduction in tax revenues due to several tax cuts in recent years, and a complicated and lengthy process to balance the government's budget.

Most US states don't have as dramatic of a political fight when it comes to balancing state budgets, due in part to the fact that many often have one party that has a majority throughout different chambers of the legislature.

"Fitch believes US state governments are extremely strong credits, with significant autonomy to provide the services that they believe appropriate and impose the taxes needed to fund those services. The very high ratings of most US states reflect their record of using these powers to balance budgets and limit leverage," Fitch Ratings head of US Public Finance Arlene Bohner told Insider.

These are the 12 states that have at least two AAA debt ratings from the three rating agencies, compared to the US government's single triple-A rating from Moody's, and its AA+ rating from Fitch and S&P.

12. Texas

Austin, the capital of Texas and home to the University of Texas, has emerged as a promising tech hub as companies like Tesla and Google relocate their headquarters to the metro.Peter Tsai/Getty Images

Fitch Rating: AAA
S&P Rating: AAA
Moody's Rating: Aaa

11. Tennessee