(The Center Square) – Kansas recently improved its highway revenue bond credit rating.
Fitch Ratings upgraded the rating on roughly $1.25 billion of outstanding Kansas Department of Transportation highway revenue bonds to “AA” from “AA-,” according to a press release from Governor Laura Kelly’s office.
The credit rating organization cited Kansas ending transfers from the State Highway Fund (SHF) to the state’s general fund for non-transportation expenditures as a reason for the upgrade.
From 2014 to 2018, the state moved more than $1.7 billion from KDOT to other parts of the state budget, according to Kelly’s office.
“Since taking office, my administration has exercised fiscal responsibility resulting in balanced budgets, fully funded schools for the fifth consecutive year, and closing the Bank of KDOT once and for all,” Kelly said. “This rating upgrade indicates that the financial sector recognizes the work we have done to get our state back on track and make Kansas attractive to families and businesses.”
The improved grade comes after Moody’s Investors Services downgraded the state’s highway bond ratings in 2014, 2016, and 2018.
As a result of the improvement, the state can borrow at a lower interest rate. The agency’s Eisenhower Legacy Transportation Program, or IKE, will fund $10 billion worth of capital projects through fiscal year 2030, the release said.
“The improved bond rating is a testament to the bi-partisan support of funding transportation in Kansas,” Kansas Secretary of Transportation Calvin Reed said in the release. “KDOT’s overall financial health helps achieve our mission of making transportation investments that benefit Kansas now and into the future.”
The improved rating for Kansas reflects “the steady performance of pledged revenue streams throughout the pandemic, growth in KDOT’s available fund balances, and improvements in the underlying credit quality of the state of Kansas,” according to the release.
The agency also praised Kansas for its steady revenue streams for SHF, including sales and motor fuel tax revenues, registration/license fees, and federal reimbursements.
The state’s Department of Transportation will issue more highway revenue bonds starting in fiscal year 2025 to raise $250 million. The state agency has $1.5 billion in outstanding highway revenue bonds.
