Fitch

Most states continue to fare well, despite economic shocks and weakening revenue growth.

Fitch said its upgrade of Kentucky's IDR "reflects material improvements to Kentucky's fiscal reserves since 2020 as a result of improved budgetary discipline.

"When the rating agencies developed and rolled out their ESG scores, they said their ESG scores would not impact an issuer's credit rating. We are holding them to their word," said Ben Watkins, director of the state Division of Bond Finance.

The bulging surpluses are a result of $5 trillion in economic stimulus from the federal government including American Rescue Plan Act (ARPA) funds which boosted economic activity and tax revenues.

Inflationary-driven challenges pose a drag on hospitals’ fiscal recovery from the pandemic with short-, mid-, and long-term action needed.

Governance is the single most important ESG factor in public finance ratings, given the impact of governance structure, Fitch said.

“Compromised systems can directly affect public finance entities in the near term,” says Fitch's Omid Rahmani, citing ransomware risks.

Entering the third year of a pandemic, higher education is expected to gain stability amid a flood of federal aid.

If enacted, Build Back Better would promote economic growth and likely have a limited impact on inflation, ratings agencies say.

In both states, jobs have recovered past where they were prior to last March when the pandemic hit the U.S.