Economy

Credit upgrade defies prior doomsday predictions

March 17, 2026

Ray Carter

In 2019, during Gov. Kevin Stitt’s first year in office, Kent Olson, professor of economics emeritus at Oklahoma State University, argued that Oklahoma government needed to raise taxes to avoid major shortfalls in future years.

“Oklahoma’s Long-Run Budget Prospects: Better, But Not Good Enough,” by Olson, predicted Oklahoma state tax collections available for legislative appropriation would increase from $7.6 billion in 2019 to $11.2 billion by 2030. But Olson argued that spending should increase at an even faster rate and surge from $7.6 billion in 2019 to $12.3 billion by 2030. As a result, he predicted an ever-growing “deficit” each year from 2020 to 2030 with the 2030 deficit hitting $1.1 billion.

Olson urged lawmakers to increase the personal income tax rate from 5 percent to 6 percent, expand the sales tax to also include services, and nearly double the state’s gross production tax. 

In the years since, policymakers have done the opposite. They have cut the income tax to 4.5 percent and put it on the path to full repeal. Rather than expand the sales tax, lawmakers exempted groceries from sales tax. And they left the gross production tax unchanged.

The end result has not been a state government on the verge of collapse, but one enjoying its strongest financial standing in many years.

The latest evidence came from Fitch Ratings, which became the third rating agency to upgrade the State of Oklahoma’s credit rating to AA+ with a Stable Outlook.

In its report, Fitch cited several key drivers behind the state’s credit strength, including Oklahoma’s revenue and expenditure framework, low liability burden, and robust operating performance. The agency noted the state has maintained a disciplined approach to financial planning while proactively building and preserving strong operating reserves. (The state now has billions in savings, an achievement thought impossible prior to 2019.) According to Fitch, this strategy positions Oklahoma to better absorb potential economic or revenue shocks, while consistent budget management and reliable revenue forecasting provide the state with strong capacity to close potential budget gaps.

“This upgrade reflects the steady work Oklahoma has done to strengthen its financial foundation and diversify our economy,” said State Treasurer Todd Russ. “Since taking office, we have prioritized responsible financial management and building strong reserves so our state can weather uncertainty while continuing to create opportunities for Oklahoma families and businesses. A strong balance sheet today helps ensure Oklahoma remains competitive and well-positioned for growth well into the future.”

“Oklahoma is stronger than it’s ever been, and this upgrade is further proof that conservative leadership, fiscal responsibility, and free market principles work,” Stitt said. “When I entered office, I promised a turnaround for our state, and we immediately got to work. Seven years later, we’re seeing the real results of making government more efficient, cutting taxes, and delivering historic savings. We’re in an incredible financial position that will benefit Oklahomans for years to come.”

The latest action from Fitch follows previous upgrades from Moody’s in September 2024 and S&P in March 2025. In their most recent credit reports released this month:

• Moody’s Ratings noted that the State of Oklahoma (Aa1 stable) has among the strongest fund balance ratios and lowest leverage ratios for U.S. states. “We expect its balance sheet will remain strong for many years, given prudent budgetary management and dedication to preserving various, large rainy-day funds even after drawdowns for one-time expenses.”
• S&P Global Ratings stated, “The stable outlook reflects our expectation that Oklahoma will continue its practice of tight expenditure management, and that its accumulation of large reserve balances should provide a substantial financial buffer to navigate potential near-term cyclical pressures. In addition, we believe the state’s management of expenditure growth in future budgets and budgeting 95% of certified revenue will help to offset the potential effects of slower revenue growth caused by recent tax policy changes over the outlook horizon.”

With Fitch’s recent action, all three major credit rating agencies, Moody’s, S&P, and Fitch, have affirmed or increased Oklahoma’s credit ratings over the past two years.