Updated 3:13 p.m.
Minnesota's budget mess continues to smack the state with bad news.
On Friday, Standard and Poor's bond rating agency downgraded the state's grade from AAA to AA+. The agency, one of three big ratings firms, was the last to hold Minnesota's rating as perfect and now that is gone.
"The downgrade reflects what we view as the state's ongoing reliance on nonrecurring measures to balance its budget, which we believe will contribute to continued structural imbalance," said Standard & Poor's credit analyst Robin Prunty.
What that means in plain terms: Minnesota keeps passing gimmicky budgets and the agency is not sure that problem will soon be fixed.
The downgrade immediately built into the political fight at the Capitol.
"The downgrading of Minnesota's credit rating is very disappointing but not surprising, given the fiscal irresponsibility of the legislature's republican majority. Standard and Poor’s specifically cited the use of one time measures, which would not have been necessary had my proposed budget been adopted," Gov. Mark Dayton said in a statement.
On Twitter, Republicans pointed out that their proposed budget did not include the heavy borrowing of the final product. Instead, it cut far deeper than Dayton would allow.
The downgrade is not only a blow to the state's reputation, it also hurts it's bottom line.
“Unfortunately, we are no longer a triple-A state. Their assessment confirms what we all know – that we need to fix the state’s budget problems so that we don’t have large and recurring budget deficits. We also need to restore our reserves and pay back shifts. It will take time and commitment to get our ratings back,” said Jim Schowalter, commissioner of Minnesota Management and Budget.
States with better ratings can borrow money more cheaply. Now that Fitch and Standard and Poor's joined Moody's in ranking the agency below perfect, the state should expect to pay a higher interest rate on its bonds.
According to the state's finance agency that could also increase "the interest cost paid by cities, schools and other entities...that borrow based on the state’s credit."