More fallout in the Minnesota budget battle: Fitch Rating has downgraded Minnesota’s bond rating from AAA to AA+.
Minnesota Management & Budget Commissioner Jim Schowalter said the downgrade will lead to higher costs for any state borrowing and will indirectly affect the interest rate for such other public entities as cities, counties and schools.
The other two big rating agencies haven’t updated Minnesota’s rating since the shutdown began July 1, state officials said. Minnesota still has a AAA rating from Standard and Poors, and Moodys rates the state as AA1.
According to Minneapolis St. Paul Business Journal:
Fitch also downgraded the rating on the state’s school district credit enhancement program to AA, from AA+.
Fitch said part of the reason it lowered its ratings was the state’s “difficulties in reaching consensus on a plan to address the resulting large budget gap for the biennium that began on July 1.”
The last time the state was downgraded it took 15 years to regain the highest rating, officials dsaid.
“This downgrade is the result of several budgets in which the State didn’t act to address its structural deficit. For years Minnesota has prided itself on having constructive, responsive public solutions but in the eyes of the marketplace, we are slipping.
“This downgrade is a sad statement for those who have worked to deliver quality public services and took our high ratings extremely seriously. The best we can do now is to resolve the budget debate in a timely fashion and in a manner that addresses our long-term financial stability.”