Texas maintains AAA credit rating from multiple agencies
The article reports that Texas has maintained its top-tier AAA/Aaa credit ratings from major agencies including S&P global Ratings, Fitch Ratings, Moody’s Investors Service, and KBRA. The state comptroller’s office highlighted factors such as Texas’ diversified economy,steady population growth,strong fiscal reserves,and disciplined financial management as reasons for the high credit ratings and stable financial outlook.
These AAA ratings signify strong investor confidence, allowing Texas to borrow at lower interest rates, which benefits taxpayers by reducing borrowing costs. Notably, the Texas Bond Guarantee Program, backed by the Texas Permanent School fund, also retained its AAA rating. This program supports public school and charter district bonds, helping school districts save an estimated $400 million annually in financing costs.
Texas’ substantial reserves come largely from oil and natural gas taxes, with record payments of $27.3 billion in 2024 fueling state funds like the Economic Stabilization Fund (Rainy Day Fund) and the Permanent School Fund. The state also reported a $24 billion budget surplus earlier in the year.
Credit agencies point to Texas’ broad tax base, balanced budget adherence, ongoing population and employment growth, and strong economic fundamentals as key contributors to its fiscal stability. As the eighth-largest economy globally, Texas continues to lead the U.S. in job creation, affirming its resilient and future-ready economy, according to Acting Comptroller Kelly Hancock.
Texas maintains AAA credit rating from multiple agencies
(The Center Square) – Texas has maintained its AAA/Aaa credit rating from the major credit rating agencies S&P Global Ratings, Fitch Ratings, Moody’s Investors Service and KBRA, the state comptroller’s office announced.
The credit rating agencies cite “Texas’ diversified economy, steady population growth, strong fiscal reserves and disciplined financial practices in reaffirming the state’s credit standing,” Acting Texas Comptroller Kelly Hancock said. They all also state that Texas’ financial outlook is stable going forward.
“Texans expect their tax dollars will be handled wisely,” Hancock said. “Confirmation of our AAA rating reflects sound fiscal management and the strength of our state’s economy. Importantly, it means low borrowing costs for taxpayers and real stability as we continue to invest in government’s core functions, from education to infrastructure and public safety.”
Credit ratings provide independent assessments of Texas’ financial condition. The top rating is a AAA designation, which indicates to investors that Texas bonds are considered secure, Hancock explains. Texas’ AAA rating allows the state to finance projects at the lowest possible interest rates, reducing overall borrowing costs.
S&P Global Ratings reaffirmed the AAA credit rating for the Texas Bond Guarantee Program (BGP), one of Texas’ most critical financial tools for public education backed by the assets of the Texas Permanent School Fund (PSF). The Texas PSF Corporation (PSFC) manages the PSF, which is administered by the Texas Education Agency.
The BGP guarantees the principal and interest on public school and charter district bonds, enabling school districts to access the lowest possible interest rates. It currently backs more than $135 billion in bonds, which the PSFC argues saves Texas school districts and taxpayers an estimated $400 million annually in lower borrowing costs.
“S&P Global’s reaffirmation underscores the Texas Permanent School Fund’s financial strength and the dependability of the Bond Guarantee Program,” PSFC CEO and CIO Robert Borden said. “This rating helps hundreds of school districts and charter schools across Texas lower their financing costs – allowing them to invest more in classrooms, teachers, and students. We are honored to contribute to this unique program and to support Texas schools in such a meaningful and lasting way.”
The PSF and Texas’ Economic Stabilization Fund, (Rainy Day Fund), are primarily funded from oil and natural gas taxes, which continue to have record reserves. This is after in 2024, the Texas oil and natural gas industry paid a record $27.3 billion in taxes and royalties, more than the revenues of 34 states, The Center Square reported.
In January, Texas had a nearly $24 billion surplus, higher than originally projected. No projected reserves were to be transferred to the Rainy Day Fund in the 2026-2027 biennium because its balance also hit a record, the comptroller’s office said earlier this year.
For the first time in the fund’s history, the fund balance was estimated to exceed its constitutional cap from the start of fiscal 2026, The Center Square reported.
“Texas’s ‘AAA’ rating reflects its strong economy and fiscal flexibility, supported by substantial reserves. The state projects $176.4 billion in revenue for the fiscal 2026–2027 biennium, a 5.4% increase,” Fitch Ratings said.
The ratings also point to Texas’ broad tax base, adherence to balanced budget requirements, ongoing population and employment growth as factors that contribute to long-term stability, Hancock notes.
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Every month, Texas leads the U.S. in job creation breaking the state’s own employment records, The Center Square reported.
.“Texas is the eighth-largest economy in the world, and these ratings confirm what families and businesses already know: our state is strong, resilient and built for the future,” Hancock said. “The Comptroller’s office is committed to keeping our finances on firm footing so we can continue delivering conservative, responsible government that works for every Texan.”
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