Another firm keeps still on Minn. credit rating
All three of the Wall Street agencies that make credit determinations for states have now weighed in on the budget fight between DFL Gov. Mark Dayton and the Republican-led Legislature, with two saying there's no reason for alarm and a third putting the state on notice.
Moody's Investors Service delivered its verdict on Wednesday in a statement first provided to The Bond Buyer and relayed Thursday to MPR News. Genevieve Nolan, a Moody's vice president and lead analyst for Minnesota ratings, said the state's strong economy and finances have already been balanced against its "idiosyncratic budget problems" of recent years.
"The state has many tools available to ensure debt service is paid on time and in full," she said. "We expect it will continue to adhere to the sound financial management practices while resolving the funding plan for the state House and Senate."
Dayton's line-item veto of House and Senate operating budgets has caused doubt about whether lease payments will be made on a Senate office building. Those funds feed into an account used to make twice-yearly debt payments, with the next due in December.
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As a result, S&P Global Ratings said last week that it was putting Minnesota on credit watch. Fitch Ratings decided this week it wouldn't make any moves on Minnesota's status for now.
The ratings determine how much the state is charged in interest when it borrows for construction projects. Minnesota has a near-perfect credit rating.
Both S&P and Fitch suggested the Department of Administration could use other funding sources to pay the debt, although administration officials haven't said if they concur with that assessment in response to multiple requests from MPR News.
Asked about that Wednesday, Dayton didn't address that either other than to say he believes S&P acted hastily.
"My belief is that these matters will be resolved by the judiciary one way or another. I can't say exact timeline but certainly well before December," Dayton said. "I do not believe the bonds are at any risk whatsoever. Minnesota, to my knowledge, has never defaulted on bonds. We do not intend to default on these, and we will not do so.
The validity of Dayton's line-item veto is the source of a lawsuit that is set for its first hearing Monday in Ramsey County District Court.