Industry News

On January 4, 2022, S&P Global released its report, Outlook for U.S. States: Federal Funds Fuel Spending: Will Inflation Impede the Impact? S&P Global reported that U.S. states have a stable view for the coming year; however, positive credit strengths are offset by significant uncertainties. Over the past two years during the pandemic, states have taken actions to balance their budgets mainly due to federal funding. In 2022, the additional risks that may impact credit conditions include: coronavirus variants, inflationary uncertainty, and ongoing employment and supply chain challenges. 

According to S&P Global, “Reserve levels for many states are at all-time highs, with an aggregate $188.6 billion expected to be available by 2022 fiscal year end. Fiscal 2021 ended with 21 states with rainy day or budget stabilization fund balances over 10% of general fund expenditures and fiscal 2022 is set to see that count grow to 27 states. However, these balances may not fully account for the breadth of unspent resources many states carried forward. We believe the combined build-up of reserves and other available resources provide an operating flexibility and liquidity cushion for states to navigate their economic recoveries and emerging budgetary risks.”

The report is available here.