Connecticut received its first push out of double-A territory Friday, as Fitch Ratings downgraded the state to A-plus from AA-minus as the state grapples with a budget crisis.

Fitch cited reduced expectations for economic and revenue performance over the medium term and a deterioration in its assessment of the state's through-the-cycle fiscal flexibility.

The Connecticut State Capitol in Hartford.
Fitch Ratings downgraded Connecticut Friday as the state grapples with budget shortfalls. Adobe Stock

“Despite a demonstrated commitment to identifying structural solutions to budget shortfalls, the state's ability to manage is constrained by a comparatively high liability burden that reduces its scope of flexibility,” Fitch analysts wrote. “The state remains pressured by revenue collections that are failing to keep pace with rising expenditures, as evidenced in the recent downward revision to its revenue forecast for the current and future fiscal years.”

The new A-plus rating applies to the state’s issuer default rating and about $16.6 billion in outstanding general obligation bonds and $5.3 billion in outstanding special tax obligation bonds issued for transportation purposes, both senior and subordinate lien.

Other ratings that are notched from the state’s rating were also dropped on notch.

The outlook is stable at the new rating.

S&P assigns Connecticut its AA-minus rating and negative outlook. Kroll Bond Rating Agency assigns its AA-minus with a stable outlook. Moody's Investors Service rates the bonds Aa3, also with a negative outlook.

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