Minn.'s bond rating downgradedby Annie Baxter, Minnesota Public Radio
St. Paul, Minn. — The budget impasse at the Capitol has resulted in a lower bond rating for Minnesota. Fitch Ratings has downgraded the state's bond rating from the highest rating of AAA to AA+.
A report from Fitch says the downgrade reflects the state's "reliance on non-recurring gap-closing measures over the course of the recession," the "contentious budgeting environment" over the past few years, and the likelihood that the eventual solution will not be a permanent fix to the state's budget problems.
Minnesota Management and Budget Commissioner Jim Schowalter said the state is being downgraded because the state has relied in recent years on temporary solutions to its budget problems.
"Fitch has hung with us on a Triple A rating and basically said, 'The state isn't behaving, doesn't have a solution on the table, doesn't have a history of resolving that structural gap and doesn't look like it's about to,'" he said.
Schowalter said the downgrade from the agency will make it more expensive for the state to borrow money. The move also affects the interest rate for cities, counties, and schools.
According to MMB, the last time the state's rating was downgraded it took 15 years to regain the highest rating.
Fitch notes that Minnesota's economy is otherwise "balanced," with employment gains tracking the nation's and the unemployment rate well below the national average. The state also has a relatively low debt burden.
Standard and Poor's and Moody's have not changed their bond ratings for Minnesota.
(MPR's Tom Scheck contributed to this report)