Louisiana’s Bond Rating Improved to ‘AA’

Fitch Ratings upgraded Louisiana’s credit rating from “AA-” to “AA” last week, according to a statement released by the global agency. The state should now expect to pay less in interest when borrowing money for roadwork and other construction projects.

The upgrade was attributed, in part, to new tax laws approved by Gov. Jeff Landry and the Louisiana Legislature two years ago. The Fitch report stated, “The upgrade reflects the state’s successful implementation of 2024 revenue policy changes, which reduces a projected structural gap.”

Landry and state lawmakers avoided a major state budget deficit by eliminating an automatic sales tax cut before it took place in 2025. Instead, they raised the sales tax rate further to offset a new income tax reduction. They also shifted revenue dedicated to major transportation projects into accounts for expenses such as healthcare and higher education.

State Treasurer John Fleming said the credit rating improvement should be celebrated. “We must continue building on this progress to ensure that Louisiana’s finances remain strong for years to come,” he said in a written statement.

Louisiana Senate President Cameron Henry and House Speaker Philip DeVillier said the legislature will continue to focus on bringing long-term fiscal stability to the state. “We are not done yet, but we are making the changes necessary to secure our state’s fiscal future,” Henry said in a written statement.

Fitch warned that a reversal of the new tax policies – for example, a future sales tax rate cut – could cause the rating agency to downgrade Louisiana’s credit in the future. The report states, “Slow economic growth, the planned partial rollback of the 2024 sales tax increase and the relocation of certain revenue from the general fund to transportation projects could constrain long-term revenue growth. These factors will be important determinants of future financial performance.”