San Angelo Credit Ratings Downgraded by Fitch

SAN ANGELO, TX — In six days in June, Fitch Ratings cut both the City of San Angelo and San Angelo Independent School District from AA+ to AA. The Outlook for both remains Stable.

These downgrades are not minor technicalities. They signal that Fitch no longer believes San Angelo’s economic growth is strong enough to support the higher rating.

What Fitch Said

City of San Angelo (June 10, 2026)

• Fitch lowered the city’s Issuer Default Rating and all outstanding general obligation and certificate of obligation debt from AA+ to AA.

San Angelo Independent School District (June 16, 2026)  

• Fitch took the identical action on the district’s Issuer Default Rating and all unlimited tax bonds.

The agency listed the same core reasons for both:

• Elevated long-term liability burden relative to personal income and governmental revenue  
• Weak post-pandemic population trend (rated “Weakest”)  
• Absence of material resource-base growth to offset higher liabilities  
• Removal of a previous +1 model deviation because key metrics showed limited improvement

What “Removal of a Previous +1 Model Deviation” Actually Means

Fitch uses a scoring model based on hard data — debt levels, population trends, tax-base growth, reserves, and economic indicators. That model produces a baseline rating.

Sometimes, even when the pure numbers point lower, Fitch applies a manual “model deviation.” A "+1 model deviation" means the agency was deliberately boosting the rating by one notch (keeping San Angelo at AA+ when the model itself said AA). They do this when they believe positive trends are coming or when they want to give management the benefit of the doubt.

In recent years Fitch had been giving San Angelo that extra notch.

That benefit of the doubt is now gone.

Fitch looked at the same key metrics again. They analyzed population growth, growth in the tax base, and the size of long-term liabilities relative to personal income and revenue and saw limited or no real improvement. Because those numbers failed to get better, the agency removed the +1 boost.

In simple terms: the model said AA. Fitch had been rounding it up to AA+. When the expected improvement never materialized, they stopped rounding up.

Both the city and the school district still receive an “aaa” financial resilience assessment. Day-to-day financial management remains strong and reserves are solid. The problem is not how the money is managed. The problem is that the underlying economy is not growing fast enough to support the previous rating.

The Numbers Back Fitch Up

Sales Tax Revenue

City of San Angelo General Fund sales tax collections are up only 3.41 percent year-over-year — less than the 4.2 percent inflation rate. That equates to roughly $724,000 in additional revenue.

Peer comparison of sales tax revenue year-to-date:

• Abilene: +19.64 percent  
• Midland: +10.04 percent  
• Lubbock: +6.69 percent  
• Statewide +6.00 percent city average across the state: roughly double San Angelo’s growth

San Angelo’s primary revenue stream is lagging both inflation and every major West Texas peer.

Mixed Beverage Taxes (July 2026 allocation, reflecting May sales)  

Tom Green County collections:

• This period: $44,287 — down 1.76 percent
• Year-to-date: $244,161 — up only 0.64 percent

Meanwhile:

• Taylor County (Abilene): +17.83 percent year-to-date
• Wichita County (Wichita Falls): +11.78 percent year-to-date
• Lubbock County: +7.62 percent year-to-date

Hospitality and discretionary spending in San Angelo remains essentially flat while neighboring markets grow.

Housing Market (May 2026)

Texas Real Estate Research Center data shows San Angelo with the weakest price growth and loosest inventory among peer markets:

Abilene’s market is extremely tight. Wichita Falls is seeing strong price appreciation. Midland continues to lead in long-term job growth. San Angelo trails on nearly every measure.

The Bottom Line

Fitch’s decision to remove the +1 model deviation is not an opinion. It is a judgment that the expected improvement in population, tax base, and economic metrics has not occurred. The sales tax, mixed beverage, and housing data confirm that judgment.

San Angelo still has capable financial managers and healthy reserves. Those strengths kept the rating from falling further. They are not enough, however, to restore the AA+ rating or to close the growing gap with peer cities.

Higher borrowing costs will be the first consequence. Continued underperformance relative to the rest of West Texas will be the longer-term cost if the growth trajectory does not change.

Sources

• Fitch Ratings: City of San Angelo (June 10, 2026) and San Angelo Independent School District (June 16, 2026)  
• Texas Comptroller of Public Accounts sales tax and mixed beverage allocations  
• Texas Real Estate Research Center at Texas A&M University / Texas REALTORS® Data Relevance Project, May 2026 MSA Spotlight Reports