Maryland loses triple-A bond rating from Moody’s rating agency

FILE - The Maryland State House is shown, May 11, 2023, in Annapolis, Md. Photo by Brian Witte /AP

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ANNAPOLIS, Md. (AP) — Maryland lost its triple-A bond rating from Moody’s on Wednesday, a rating the state has cited for more than 50 years as a sign of strong fiscal stewardship.

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Moody’s downgraded the state’s credit rating to Aa1. Maryland had received a triple-A bond rating from Moody’s since 1973. The state has benefitted from the higher rating by paying the lowest rates when it sells bonds to pay for infrastructure, likes roads and schools.

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“The downgrade was driven by economic and financial underperformance compared to Aaa-rated states, which is expected to continue given the state’s heightened vulnerability to shifting federal policies and employment, and its elevated fixed costs,” Moody’s said.

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Gov. Wes Moore and other leading Maryland Democrats blamed President Donald Trump’s mass layoffs of federal workers, which is having a big impact on the region. The District of Columbia also recently received a credit-rating downgrade.

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“To put it bluntly, this is a Trump downgrade,” Moore said in statement made jointly by the presiding officers of the state’s legislature, Comptroller Brooke Lierman and Treasurer Dereck Davis, who are all Democrats. “Over the last one hundred days, the federal administration’s decisions have wreaked havoc on the entire region, including Maryland.”

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Maryland Republicans described the downgrade as “a harsh indictment of the state’s current direction under Governor Wes Moore.”

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“Donald Trump didn’t downgrade Maryland’s bond rating _ Annapolis Democrats did. And now they’re scrambling for someone else to blame,” Republican Sen. Steve Hershey, the Senate minority leader, said in a statement. “This is the result of reckless spending, bloated budgets, and an economy that’s been hollowed out by overregulation and overreliance on the federal government.”

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Moody’s had noted earlier this year that federal cuts pose a greater threat to Maryland than any other state.

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Maryland lawmakers recently concluded a challenging legislative session to balance the state’s budget. They closed a $3.3 billion budget deficit for the next fiscal year with a combination of tax increases, budget cuts and fund transfers.

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Maryland lawmakers also directed the governor’s budget office to keep track of the impact of federal cuts, alert them if it reaches $1 billion and make recommendations on how to deal with the impact.

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The Democrats’ statement noted that Moody’s acknowledged that the state had closed its budget gap, even as it remains exposed to the economic consequences of federal funding cuts and layoffs.

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“Maryland still holds one of the highest possible credit ratings in the nation,” the joint statement said, “and as we have for decades, we will always pay our debts.”

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