US states in strong fiscal position despite weak revenues: Fitch

ISTANBUL

US states are in a strong fiscal position despite their weak revenues, Fitch Ratings said in a statement Wednesday.

"Prior-year surpluses and prudent actions will enable most states to manage lower revenue growth or revenue declines in 2024 without affecting overall fiscal resilience and credit ratings," the statement said.

"States that have made large tax cuts or are planning additional cuts are particularly vulnerable to further revenue weakening in the coming year," it added, however.

Fitch said state revenues exceeded forecasts in the 2023 fiscal year for the third consecutive year.

The agency, however, noted that its review of a total of 41 states' monthly revenue found that there were annual declines in 21 states due to lower personal savings, cooling inflation and tax cuts.

Some states, like New Jersey and Illinois, have used surplus revenues to pay down long-term liabilities and fund capital expenditures with cash rather than borrowing, which further increased their resilience against future revenue weakness, the agency noted.

"Slower revenue growth or revenue declines are not immediately triggering budget challenges in all states," it added.