Fitch Ratings has assigned an ‘AA’ rating to $730 million worth of special tax obligation bonds Connecticut expects to sell next week.
The STO bonds, which carry a ‘stable’ outlook, will be used for transportation infrastructure projects. The AA rating is the tier below Fitch’s best investment-grade rating of AAA.
The bonds are secured mainly by motor fuel and other transportation-related revenues. Fitch said those revenues have been stable over time, with modest losses during the most recent recession.
In the face of worsening infrastructure conditions and $5.4 billion in unfunded projects, some have called for a constitutional amendment banning lawmakers from raiding transportation revenues to plug general fund shortfalls. Since 2005, Connecticut has spent only half of $2.6 billion in fuel taxes on transportation programs.
Weighing in on the matter, Fitch said the state would risk a worsened rating if it took “any future action that results in increased exposure of the transportation fund to general fund fiscal pressure.”
The agency said Connecticut’s gas tax revenues are projected to dip nearly 1 percent this year, after increases of 1.4 percent the past two years.
