After being ranked dead last in the country a year ago and 49th in May, Connecticut’s credit ranking has improved to 45th, according to Conning’s ‘State of the States’ ranking.
The improvement was due to tax revenue growth. Conning said the state’s tax revenue improved by a larger margin than any other state. Meanwhile, Illinois dropped down to the lowest spot, from 46th six months ago.
It was Connecticut’s best ranking in the bi-annual survey in some time. The state earned 37th place in 2011.
Connecticut continues to face the challenge of high legacy costs, such as public employee pensions and health care, which Conning said would be difficult to overcome with economic growth alone. Other weak areas include low employment growth, high economic debt to personal income and debt per capita, and sluggish home prices. The state continues to have the highest per capita income.
Conning’s ranking assesses factors like economic competitiveness, debt to personal income, general-fund health, unemployment, and housing prices.
Some states’ debt levels are affected by variation in how they borrow. For example, Connecticut and Hawaii issue general obligation debt for school construction, while most states issue debt at the local level.
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