Utah's Series 2019 General Obligation Bonds Rated 'AAA' With A Stable Outlook; Other Ratings Affirmed

NEW YORK (S&P Global Ratings) Jan. 9, 2019--S&P Global Ratings assigned its 
'AAA' long-term rating and stable outlook to the State of Utah's $129 million 
general obligation (GO) bonds, series 2019. 

We also affirmed our 'AAA' rating on Utah's $2.4 billion GO bonds outstanding. 
In addition, we affirmed our 'AA+' long-term and underlying ratings on the 
state's $315.1 million bonds outstanding secured by annual state lease 
appropriations and affirmed our 'AA' rating on Utah's moral obligation 
programs, which give credit support to certain debt issued by state 
universities and charter schools. Finally, we have affirmed our 'AAA' program 
rating on certain local school debt guaranteed by the state. The outlook on 
all ratings is stable. 

Our ratings on Utah's GO bonds reflect our view of the state's:
  • Strong governmental framework, with a constitutional requirement to maintain a balanced budget and a fiscal policy that allows for changes to the revenue structure and program spending by a simple majority of the legislature;
  • Diverse economy, showing strong population and employment growth and below-average unemployment, that offers employers a young, well-educated work force;
  • Continued good financial management, including proactive budget adjustments to maintain adequate rainy-day reserves, which are currently at strong levels; and
  • Moderate debt burden and limited other postemployment benefit (OPEB) liabilities.
The GO bonds are secured by a pledge of Utah's full faith, credit, and 
resources and an unlimited ad valorem property tax that may be levied on all 
property subject to state taxation. The 2019 GO bonds are being issued to 
finance various transportation projects. 

"The stable outlook reflects our view that the state's economic strength, 
financial practices, and fund balance position should enable Utah to retain 
its strong credit profile over our two-year outlook horizon," said S&P Global 
Ratings credit analyst David Hitchcock. 

By following a practice of building reserves during periods of economic 
expansion, Utah boosts resilience for economic slowdowns. Furthermore, its 
approach to budgeting for structural fiscal balance and breaking out the use 
of one-time revenues for one-time expenditures stands out as prudent fiscal 
management, in our opinion. Adding to the stability of Utah's credit quality, 
in our view, is that the state's revenues are currently in a growth mode, 
allowing Utah to strategically invest in its transportation infrastructure and 
increase funding for its growing school age population. 

Factors that could cause negative rating pressure, in our opinion, would 
include the state falling out of long-term structural balance, or a 
significant rise in long-term liability levels, although we do not anticipate 
this occurring over the next two years.