State Treasurer Beth Pearce and Governor Phil Scott Comment on Fitch’s Downgrade of Vermont’s Bond Rating to AA+ | Office of the State Treasurer Skip to main content

State Treasurer Beth Pearce and Governor Phil Scott Comment on Fitch’s Downgrade of Vermont’s Bond Rating to AA+

July 10, 2019

MONTPELIER, VT — Vermont State Treasurer Beth Pearce and Governor Phil Scott issued the following statement after Fitch Ratings, Inc. announced their decision on the State’s bond rating.

“Fitch Ratings has downgraded the general obligation credit rating of the State of Vermont from AAA to AA+ with a stable outlook, its second highest rating. This outcome is not unexpected, and while it is not the outcome we’d aimed for, Fitch’s report also noted many positives. Those include the State’s continued strong financial management, sound reserves, the leveling of Medicaid spending, and modest steps taken towards reducing our pension liabilities, including a path to prefunding for our state employee and teacher other post-employment benefits (OPEB). 

“The report underscores, once again, the State’s demographic challenges as a deciding factor. The AA+ rating ‘is sensitive to changes in the State’s fundamental economic growth trajectory,’ according to the report. It also notes: ‘Material and sustained improvement in the State’s demographic profile, such as through consistent population and labor force gains, could support revenue growth prospects and a more robust revenue framework assessment.’

“Important progress has been made in several areas this year. The Treasurer’s Office partnered with the Governor and General Assembly to reduce long-term pension and post-employment benefit pressures. In addition to fully funding the actuarially determined employer contribution (ADEC), the FY2020 budget increased reserves to the level recommended by the rating agencies. 

“However, our demographic challenges continue to overshadow all of our other efforts. We need to continue to work together, as we have with the pension liabilities, to further advance policy initiatives that bring more people to Vermont and more people into our workforce. 

“Fitch’s report recognizes that many policy initiatives have been put forth by the Governor’s Office and the Legislature, most notably those aiming to attract more people to Vermont, such as the remote workers incentive. The fact that population declines have leveled off in the past two years is encouraging, but it is clear we have more to do to make Vermont more affordable for families and businesses and to revitalize our economic centers throughout the State.   

 “Vermont has many strengths, which all three rating agencies continue to recognize and uphold.  We are confident these attributes will accrue to our benefit in the years and decades ahead. To ensure a strong future, the Treasurer’s Office and the Governor stand ready to partner with the General Assembly, and other State and local officials to continue progress and reverse our demographic trajectory.”