Oklahoma gets S&P upgrade to AA-plus

Oklahoma Treasurer's Office

S&P Global Ratings lifted Oklahoma's issuer rating a notch to AA-plus on Wednesday, giving the state its second upgrade in a little more than six months.

S&P also raised the rating on outstanding appropriation-backed debt issued by the Oklahoma Capitol Improvement Authority and Oklahoma Development Finance Authority to AA from AA-minus.

"The upgrade reflects our view of Oklahoma's consistently positive financial results and management's commitment to structural stability of its finances, demonstrated by its contributions of revenue windfalls for one-time purposes and to make progress toward fully funding pension liabilities," S&P analyst Thomas Zemetis said in a statement.

The rating agency also pointed to its view that "the state will continue to build and sustain high reserve balances and liquidity in a way that provides a substantial cushion to the state's operations in the event of cyclical revenue swings stemming from economic or energy market pressures."

Moody's in September upgraded Oklahoma a notch to Aa1, citing "very strong fund balances and dedicated reserves alongside extremely low leverage and fixed costs from debt, pensions, and retiree healthcare."

That upgrade marked the first for Oklahoma since Moody's, S&P, and Fitch Ratings, which rates the state AA, revised their outlooks to positive from stable beginning in 2023.

S&P said its now stable outlook reflects its expectation Oklahoma's large reserve balances "should provide a substantial financial buffer to navigate potential near-term cyclical pressures" and the state's budgeting of 95% of certified revenue that will help offset the potential effects of slower revenue growth or recent tax policy changes. 

Republican Gov. Kevin Stitt, who is once again seeking income tax rate cuts, has said financial reserves will total $4.95 billion when fiscal 2025 ends June 30. 

House Bill 1539, which passed the House Tuesday in a 76-20 vote, would cut the 4.75% personal income tax rate by a quarter point each time net state revenue increases by at least $300 million until the rate is zero. The measure is one of several tax cut bills that have been filed as the state faces slightly lower revenue projections for the upcoming fiscal 2026 budget compared to fiscal 2025. 

Oklahoma officials cheered the S&P upgrades.

"Oklahoma's financial discipline is paying off, and this upgrade is a testament to the careful stewardship of our state's finances," State Treasurer Todd Russ said in a statement. "This rating increase reflects not only our commitment to sound fiscal policy but also the stability of Oklahoma's financial position. As our economy continues to diversify—from energy to aerospace, manufacturing, and technology—our ability to manage revenues responsibly ensures we can support long-term growth while protecting taxpayers from economic uncertainty. "

S&P took the rating action ahead of the mid-April sale of approximately $256 million of Oklahoma Capital Improvement Authority State Highway revenue bonds, which it rated AA with a stable outlook.