A top financial agency is upgrading Minnesota’s credit rating to its highest level, lowering the cost of state borrowing and signaling strong approval of the state’s financial management in recent years.

Fitch Rating’s upgrade to AAA “is a testament to the hardworking Minnesotans and businesses across our state who have led our economic recovery, and to the work our state has done over the past six years to right the fiscal ship," Gov. Mark Dayton said.

Fitch Ratings had downgraded Minnesota’s rating one notch below its top rating, to AA+, in 2011, after the state drained budget reserves and borrowed billions of dollars from public schools as the state emerged from a deep recession.

The next year, Dayton won passage of a measure to increase income taxes on high earners, which helped refill the state reserve fund as the economy rebounded. The state’s rainy-day fund is now approaching $2 billion, its highest level in state history.

“This upgrade from Fitch is a reflection of our work to create a budget that is structurally sound,” said Management and Budget Commissioner Myron Frans. “A budget that balances revenues and spending, ensures our reserves continue to build, and allows us to continue making smart investments in Minnesota’s future.”

This upgrade from Fitch follows an improved rating outlook from another top rating agency, Standard & Poor’s. The ratings are important because they help establish interest rates for state debt. Higher interest rates mean it costs taxpayers more to borrow money for roads, bridges and other statewide construction projects.

Fitch based their upgrade on “Minnesota’s solid and broad-based economy, a revenue structure well designed to capture economic growth, a low liability burden, strong control over revenues and spending” and “a sophisticated approach to reserve funding.”

In August, the state will sell nearly $788 million in general obligation bonds to pay for previously approved construction projects and to refinance old debt.

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