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State's rating by Moody's goes from stable to negative

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A national credit rating agency has changed Minnesota's outlook from stable to negative.

Moody's Investors Service expressed concern over the size of the state's reserves and the short-term fixes used to reach a budget deal last month.

Jim Schowalter, commissioner of the Minnesota Management & Budget Office, said the negative outlook won't change the interest rates the state has to pay to borrow money. Only a change in the bond rating would do that. For now, Moody's still rates Minnesota AA1, a notch below the top score of AAA. 

But Schowalter says the negative outlook sends a warning that Moody's will be keeping an eye on the state's problems over the next 18 months.

"We all know about the one-time solutions that are in our budget. And really what we need to do is continue to look at fixing that," Schowalter said. "The underlying credit is still strong. And they're really affirming that we're still a AA1 credit or better."

"And if we are able to resolve these things then we'll be put back on a stable outlook."

Fitch Ratings downgraded the state last month. Minnesota only retains a AAA rating from Standard & Poor's.