Moody’s Investors Service has praised Connecticut for expanding its Rainy Day Fund to Noah-worthy dimensions.The ratings agency noted in an analysis that the state’s recent $200 million contribution to the fund has raised its level to $2 billion, which can be tapped for addressing issues within the next state budget. Moody’s said this was a welcome development in view of Connecticut’s fiscal problems.
“The balance in the fund would be the highest ever, a credit positive for a state that has experienced a stagnant economy and numerous financial challenges,” said Marcia Van Wagner, vice president and senior credit officer for Moody’s Investors Service.
Van Wagner noted that while Connecticut’s employment growth lagged behind the national average, “the continuing strong stock market and other positive economic developments in the state are bolstering revenues.”
She added that the revenue stream included personal income tax collections, which are greater than one year ago, along with earnings from the state’s hedge funds taxpayers rushing to take advantage of the federal tax deduction for state and local taxes that is set to vanish due to the Tax Cut and Jobs Act of 2017.