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S&P upgrades its Arkansas’ outlook from stable to positive

  • Posted Date: 05/07/2024
  • Office: All DFA
  • News:

    May 7, 2024

    Scott Hardin, DFA
    501-352-9351, scott.hardin@dfa.arkansas.gov

    S&P upgrades its Arkansas’ outlook from stable to positive
    Upgrade highlights strong budget management and financial resiliency

    LITTLE ROCK, Arkansas (May 7, 2024) – S&P Global Ratings recently announced its outlook on the State of Arkansas was upgraded from stable to positive, also affirming its long-term AA rating on state general obligation bonds. Moody’s, another credit rating firm, also affirmed the state’s Aa1 rating. 

    In the report, S&P noted the upgrade to positive “reflects Arkansas’ demonstrated strong budget management practices and financial resiliency across economic cycles, which has yielded steady operating surpluses and an accumulation of exceptionally high reserves.”

    “Here in Arkansas, we’re managing to do the impossible, cutting taxes while still making needed investments and growing our record reserve funds,” said Governor Sarah Huckabee Sanders. “We appreciate that S&P recognizes this achievement and has upgraded our state’s outlook to reflect our positive economic momentum.”

    The S&P report continued “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.”

    “I’m pleased that both Moody’s and S&P affirmed their credit ratings for the State of Arkansas,” said Jim Hudson, Secretary of the Arkansas Department of Finance and Administration. “S&P’s improved outlook for the state from ‘stable’ to ‘positive’ is a direct result of the hard work by Governor Sanders and the Arkansas General Assembly to fully fund our long-term reserves and to limit the growth of spending.  S&P also noted Arkansas’s improved economic and demographic trends as a reason for its positive outlook for the state. This confirms that Governor Sander’s fiscal and economic policies are making the state an ideal place to invest, work, and live.”

    The State of Arkansas’ record reserve funding includes $1.529 billion in Catastrophic Reserve and $2 billion in Restricted Reserve, including $710 million in the newly-established Arkansas Reserve Fund.

    Governor Sanders and the General Assembly have implemented two income tax cuts since January 2023, reducing the top individual rate from 4.9% to 4.4% and the corporate rate from 5.3% to 4.8%.

    A full list of state credit ratings from S&P Global is available at U.S. State Ratings And Outlooks: Current List | S&P Global Ratings (spglobal.com).