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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowWe are pleased to see that the state has maintained its AAA credit rating—the highest rating available—from all three of the major credit-rating agencies, an accomplishment shared by only 13 other states.
Although the independent ratings were released in September 2024, April and June, the news flew a bit under the radar until Gov. Mike Braun publicized them with a press release this week.
“Indiana’s AAA rating is more than a financial milestone,” the Republican governor said in the news release. “It’s a signal to taxpayers, investors, and businesses that our state is well-managed, fiscally responsible and focused on delivering growth for Hoosiers throughout the state.”
These ratings matter when the state borrows money for public projects. A AAA rating gives the state readier access to capital at lower interest rates, meaning that projects are constructed for less.
Just like a credit score higher than 800 gives an individual a cheaper interest rate on a car, a AAA credit rating for a government entity means better rates for new bridges, university buildings, state police posts and more.
Moody’s, which released the most recent rating, wrote in a report that Indiana “will preserve its strong fund balances” through the 2027 fiscal year thanks to budget controls the Legislature and the Braun administration enacted when a revenue forecast projected lower-than-expected tax receipts.
Among the state’s strengths, Moody’s said, are its “very strong fiscal governance that results in high reserves and liquidity, stable financial operations and sound budgeting practices.” It also lauded the state for its proactive contributions to teacher retirement liabilities and its “above average flexibility” to adjust to changes in revenue or spending needs.
But Moody’s also identified challenges, notably the state’s high economic concentration in manufacturing and below-average incomes and educational attainment, which it said “could limit growth opportunities.” That manufacturing bent also exposes the state’s economy to the negative impact of tariffs.
Indiana’s strong credit ratings are not an accident. A long line of governors and legislative leaders have made fiscal stability a priority—in good times and bad. The state has maintained large budget reserves, even when there’s been public pressure to spend more.
We agree with that approach in general and commend public officials for maintaining fiscal discipline.
But those same officials should also keep an eye always on the state’s challenges, among them the state’s low educational attainment and below-average incomes, as noted by Moody’s. Solving those problems is complicated, of course, but could involve additional spending.
That could be more money for workforce development and higher education. It could mean another extension of the state’s Regional Economic Acceleration and Development Initiative, or READI, program, which is meant to fund quality-of-life and community projects to attract more people to the state. It could mean more focused efforts on remediation in elementary school so that students are better prepared for post-secondary education.
We are not suggesting that the state spend recklessly. We are simply urging policymakers to always balance addressing the state’s challenges with their penchant for fiscal restraint.•
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The ability to borrow at AAA rates only matters if you actually borrow money. Indiana appears to have virtually no state level debt (and is constitutionally restricted when it comes to incurring debt).