Conning Releases 2022 State of Municipal Credit Report, Maintains Stable Outlook for State Credit Quality Amid Inflation and Rising Interest Rate Concerns

Interactive access to report data enables better understanding of metrics

  • Strong tax collections and unprecedented federal stimulus are benefiting states, though overspending could squeeze reserves and reduce recession preparedness.

  • Less favorable borrowing terms should also be monitored.

  • Florida, New Hampshire and Texas enter the top five in the rankings, bucking a historic trend toward western and mountain states.

  • Housing markets are strengthening in the West and South as Americans continue to migrate from the Northeast and Midwest — rural and suburban areas have done especially well.

  • Interactive features provide a closer look at the report‘s 13 metrics by state and region.

Conning, a global leader in investment management, today released its annual report State of the States Municipal Credit Research Report. In this year’s report, Conning maintains a stable outlook on government credit quality even as the United States grapples with inflation and rising interest rates.

Top five ranked states

The Last Five States Ranked

1. Florida

46. ​​Kentucky


47. Mississippi

3.New Hampshire

48. West Virginia




50. Louisiana

“The recovery has not been uniform,” says Karel Citroen, Conning City Research Team Leader and lead author of the State of the States report. “Some states have benefited from economic and population growth, and neither has Florida. Conditions in other states like California and Hawaii have improved significantly in 2021 after initially being hit hard by the pandemic. Looking ahead , the focus will be on what the new work of – domestic dynamics means for tax collections and what states will do with surpluses, especially with increased volatility in financial markets and growing worries of a recession American in 2023.

The report analyzed 13 indicative measures of state credit health to calculate and assign state rankings, with No. 1 being the highest and No. 50 the lowest. In this year’s report, Conning also offers access to a interactive platform with an array of charts and illustrations, an analysis of each of the report’s metrics, a history of Conning’s overall State of the States rankings through 2008, and a link to the company’s full report in 2022.

States continued to benefit from the economic recovery from the effects of the pandemic

The state’s credit quality has recovered quickly from the effects of the pandemic, according to Conning, driven by the economic rebound and an unprecedented federal stimulus. Florida, New Hampshire and Texas broke into the top five positions in the state of the state report, but some western and mountain states continue to perform well and hold five of the 10 first global rankings.

Hawaii was the lowest-ranked state in the 2021 report, but its 11-spot improvement left Louisiana dropping a spot for last in the latest rankings. The five lowest-ranked states suffered from issues such as small changes in housing prices compared to other states, low reserves, high debt levels, low GDP and weak personal income performance.

Tax revenue collected in 2021 increased by 22% compared to 2020. Alaska recorded the best growth in tax revenue, benefiting from the recovery in oil prices. All states have benefited from the unprecedented federal fiscal stimulus and the normalization of consumer spending on services. States that rely on recreation, travel and energy for tax revenue have done particularly well. Nevada and California recorded the strongest employment growth. Texas ranked fifth in job growth.

States with no personal income tax, such as Florida, Texas and Washington, have seen their labor force and employment increase. However, California, which has one of the highest personal income tax rates, also increased employment, likely due to its strong economic recovery.

Tennessee and New Hampshire posted the highest year-over-year GDP growth percentage, while Massachusetts and New York maintained their top positions in terms of GDP per capita. Idaho ranked first for population growth and personal income, with South Dakota and Florida rounding out the top three for personal income growth.

Economic activity

Housing markets have been particularly strong in Arizona and Utah, benefiting from migration from the Northeast and Midwest. States with the largest metropolitan areas, such as New York, California, Illinois, Texas, and Washington, performed well in terms of GDP per capita, which measures a state’s efficient use of its population.

Florida, the top-ranked state in the report, has both a large population and a large GDP, but is in the bottom third of the GDP per capita rankings. For a population that is the third largest in the nation, Florida is not as efficient as states like California and New York at producing an equivalent amount of goods and services, although this may be due to its large population. of retirees.

Florida also joined the top five in the house price index this year. Florida has long been a popular destination for retirees given its climate (both meteorological and fiscal) and may also now be a paradise for those who can work from anywhere.

Financial measures

The state’s extraordinary fiscal year 21 windfall is not expected to last. For example, Illinois would need to use most of its FY21 reserves in FY22 to balance its budget. New Jersey and Rhode Island also have very thin reserves compared to their budget. Structural imbalances will likely lead to lower reserves and less preparedness for recession.

Resource-rich states tend to run large surpluses during boom years, which can help cushion deficits when incomes decline, which is why Wyoming, North Dakota, New Mexico and West Virginia are at the top of the report’s ranking of reserves.

Strength in stock markets in 2021 has taken state pension funding ratios to their highest levels since the Great Recession, but that may not be sustainable as markets weaken. Conning has pointed out in the past how pension systems have put increasing pressure on a number of state budgets, as liabilities rise and returns have fallen in recent years, leading to higher annual contributions. Meanwhile, rising interest rates may also pose challenges for government borrowing needs: governments are unlikely to be able to borrow quickly and cheaply from capital markets or to solicit lending. assistance from the federal government as they did during the height of the pandemic.

About Municipal Credit Research and the Conning State of the States Report

Conning’s State of the States Report helps the firm’s investment professionals make better-informed credit decisions and improve the relative value of client portfolios. Indicators on the state of states include measures of economic activity, such as income levels, housing prices, demographic changes, growth in tax revenue, growth in state gross domestic product, unemployment rates and job growth, as well as a state’s finances and overall business environment (i.e., ability to attract new business). The results for the 2022 edition are measured in real GDP to remove the effect of inflation and focus only on the output of a state’s economy, a change from last year’s report.


Conne ( is a leading investment management firm with approximately $203 billion in global assets under management as of March 31, 2022.* With a long history of serving the insurance industry, Conning supports institutional investors, including insurers and pension plans, with investment solutions, risk modeling software and industrial research. Founded in 1912, Conning has investment centers in Asia, Europe and North America.

* As of March 31, 2022, represents combined global assets under management for affiliates under Conning Holdings Limited (CHL) and Cathay Securities Investment Trust Co., Ltd. (SITE). SITE is a separate entity under Cathay Financial Holdings Co., Ltd which is the ultimate controlling parent of all Conning entities. The CHL CEO sits on SITE’s board of directors and helps oversee the company.

Previous Relying on innovation for agile and accurate credit risk modeling
Next Conning Releases 2022 State of Municipal Credit Report, Maintains Stable Outlook for State's Credit Quality Despite Inflation and Rising Interest Rate Concerns