Given the depth of the last recession and moderate growth since, building reserves back to prior levels remains a challenge for some.

That more than half of states have built fund balances to an amount greater than before the 2008 recession is correlative to the prolonged U.S. economic expansion. While beneficial, stronger post-recession reserves are not necessarily a sign of improved credit quality. The expectation is that governments build reserves during stronger economic periods to fatten up the piggy bank they inevitably will need during times of economic turbulence.

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Erin V Ortiz

Municipal Credit Analyst, Managing Director

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