Oklahoma’s credit quality is looking up, rating agencies say, with Fitch Ratings joining Moody’s Investors Service and S&P Global Ratings in revising the state’s rating outlook to positive from stable.

Fitch, which rates Oklahoma AA, said Friday the revision reflects sustained improvements in expenditure flexibility and overall fiscal management, “particularly its adherence to conservative budgeting practices through economic cycles including the recent period of revenue volatility caused by the coronavirus pandemic.”

“Oklahoma has long been the best-kept secret, and the secret is out,” he said in a statement. “Fitch, S&P, and Moody’s all see that, and their positive ratings prove it.”

Oklahoma Treasurer’s Office

“The state has consistently taken timely action to address revenue shortfalls and budgets only 95% of projected operating revenues,” it added.

Moody’s, which rates Oklahoma Aa2, revised its outlook in October, while S&P, which rates the state AA, moved the outlook to positive in July.

State Treasurer Todd Russ said Oklahoma has worked to diversify its economy, lower its debt, and “stand strong as a leader in many industries.”

“Oklahoma has long been the best-kept secret, and the secret is out,” he said in a statement. “Fitch, S&P, and Moody’s all see that, and their positive ratings prove it.” 

The outlook revisions come as Oklahoma is avoiding debt issuance by tapping a $600 million revolving loan fund created last year for projects and Gov. Kevin Stitt pushes for an income tax cut.

Three projects totaling $135 million that had been slated for bond issuance through the Oklahoma Capitol Improvement Authority were authorized for these loans, according to the treasurer’s office. 

As of the end of 2023, Oklahoma had no general obligation bonds outstanding, according to the annual state debt report. Lease revenue bonds issued through OCIA had outstanding principal of $1.336 billion. 

The Republican governor has been pushing to phase out the personal income tax, citing the state’s “record-breaking” reserves and other surplus funds.  The Republican-controlled Senate has held off on any action until certified budget numbers from the Board of Equalization are released Thursday.

The proposed tax cut comes amid a trend of declining state revenue, both nationally and in Oklahoma, where gross receipts in calendar 2023 were down 2.8% compared to 2022.

Oklahoma’s tax revenue could be adversely impacted by a case before the state Supreme Court on whether Native Americans who live and work on reservations should pay state income taxes.

A decision by the high court, which heard oral arguments Jan. 17, can come at any time. In a court filing, the Oklahoma Tax Commission said a tax exemption for tribal members would result in “tens of millions of dollars in tax refunds and deprive the state of billions more in future taxes.”

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