(Adds comment from state comptroller)
June 16 (Reuters) - Moody’s Investors Service raised New York state’s general obligation bond rating one notch to Aa1 with a stable outlook on Monday, citing sustained improvements in fiscal governance and its recent economic recovery.
State lawmakers passed a $137.9 billion budget on March 31, the last day of the budget year, marking the fourth on-time budget in a row under Governor Andrew Cuomo. That had not happened for nearly four decades and not under a single governor since Nelson Rockefeller.
The upgrade brings New York’s rating to its highest level since the fiscal crisis of the mid-1970s, state Comptroller Thomas DiNapoli said in a statement. It is now one notch below Aaa, the highest possible rating.
The action “is a clear signal to investors that New York is on the right financial path,” DiNapoli said.
Moody’s upgrade to Aa1 from Aa2 affects New York’s personal income tax revenue, sales tax revenue, and highway and bridge bonds. Other appropriation-backed debt, state intercept programs and moral obligation bonds were also upgraded by one notch.
New York has about $62 billion in outstanding debt.
Moody’s also noted that the state has improved budgetary reserves and reduced growth in spending. New York’s high debt burden is offset by below-average net pension liabilities, Moody’s said.
The state still faces challenges, including a reliance on New York City’s financial services industry for economic activity, an “expensive” environment for businesses and a history of structural gaps that are usually closed with one-time budget measures. (Reporting by Abinaya Vijayaraghavan in Bangalore; Additional reporting by Hilary Russ in New York; Editing by Joyjeet Das and Jeffrey Benkoe)