Minnesota's budget improvement has been noticed by the Moody's rating agency, which revised the state's financial outlook from "negative" to "stable."
"This action affirms that the state's financial management is headed in the right direction," said Jim Schowalter, commissioner of Minnesota Management & Budget.
Moody's Investors Service, one of the rating agencies that determines how much interest states pay to borrow money, placed Minnesota on a negative watch in August of 2001. The state's bond rating was downgraded from AAA to Aa1 in 2003.
In this report, Moody's left the bond rating unchanged. But the firm said that the change in financial outlook reflects the "state's strong financial management that has resulted in improved revenue performance, replenishment of budget reserves, and budget-balancing solutions that are largely recurring."
"Moody's expects that the state will continue to exhibit sound financial practices that will lead to further improvement in the state's overall balance sheet," the report stated.
Among the "credit strengths" cited by Moody's were "strong economic fundamentals, including relatively diverse employment mix and high wealth"; and the "executive authority to enact mid-year expenditure reductions" when necessary.
That refers to the MInnesota governor's ability to cut or "unallot" spending without legislative approval during budget crises.
Among the "credit challenges" were "a history of gridlock in the state that leads to the use of mostly non-recurring solutions when confronting diminishing revenues;" and a "trend of political intractibility resulting in late budgets and government shutdowns (2005 and 2011.)"
The state is awaiting similar reports from two other rating agencies -- Fitch and Standard & Poor's.
Here is a copy of Moody's report: