June 15 S&P Global Ratings warned on Thursday
that Minnesota's credit ratings could be downgraded if the state
fails to fund payments for some state debt that was left without
an appropriation for the upcoming fiscal biennium.
Minnesota's AA-plus general obligation and other credit
ratings were placed on a watch list by S&P in the wake of
Governor Mark Dayton's line-item veto of funding for the state
legislature in the fiscal 2018-2019 budget.
The veto left $80.1 million of certificates of participation
issued in 2014 for a legislative office facility without money
to make rental and debt payments next due in November and
December, according to S&P.
"If the stalemate continues and increases, in our view, the
likelihood of nonpayment or the nonappropriation leads to a
termination of the lease and an extraordinary mandatory
redemption of the bonds, then we could lower our ratings on the
state as well as associated ratings by several notches," S&P
said in a statement.
It added if the state is able to meet its contractual
obligation for the debt over the next three months, the ratings
would remain at their current levels. However, the ratings'
outlook, which had been positive, would likely be revised to
stable due to the state's departure from "very strong budget
There was no immediate comment from Dayton's office.
Lawmakers in the Republican-controlled legislature sued the
Democratic governor on Tuesday, claiming his May 30 veto of
nearly $130 million for salaries, benefits and operating
expenses was unconstitutional.
(Reporting by Karen Pierog in Chicago; Editing by Matthew