S&P Global Revises WY Outlook to Positive
S&P Global Ratings revised its outlook to positive from stable and affirmed its ‘AA’ issuer credit rating (ICR) on the State of Wyoming.
The positive outlook reflects the state’s robust budgetary performance over the current biennium, including projections to finish with surpluses and boosting its already high reserves over the past two years, in addition to increasing its permanent funds, which we believe helps mitigate fluctuations from the state’s cyclical revenue base
Other highlights:
-Currently, most of the state’s major revenue sources are exceeding forecasts. The state projects to finish the biennium at fiscal 2024 year-end with a surplus in both the general fund and school foundation program fund.
-Permanent Mineral Trust Fund (PMTF) and Common School Account within the Permanent Land Fund (CSPLF), both of which are generally unable to be spent, but provides steady investment income for the state. According to the 2023 audited comprehensive financial report (ACFR), the PMTF had $10.1 billion in cash and pooled investments and the CSPLF had $4.9 billion.
Outlook The outlook reflects our expectation that there is a one-in-three chance we could raise our rating over the next two years. We expect that the state will continue to maintain available reserves at high levels, as well as preserving its large, stabilizing permanent funds to provide additional cushion that could mitigate fluctuations from the state’s cyclical revenue base, and that it will take corrective budget action if budgetary pressure unfolds over the near term.
Downside scenario Should the state experience significant budgetary pressure over the next biennium, leading to a material drawdown in reserves, we could revise our outlook back to stable. We could also lower the rating if deficits begin to emerge on a sustained basis, without resolutions to realign revenues with expenditures.
Upside scenario We could raise the rating on the state if we anticipate it will maintain long-term structural balance, and that its reserve levels will remain very high to help mitigate Wyoming’s historical swings in severance-related revenues.