Earlier this month, Moody's Investor's Service, one of three Wall Street rating agencies, reduced Minnesota's bond rating from AAA -- the highest rating given -- to the next lower level, AA1. This action took Minnesota out of the top tier of states in financial management.
The change came because Gov. Pawlenty and Republicans refused to use a balanced approach to the state's budget. They rejected the Senate Democrats' plan to make reasonable cuts to state government and raise revenues to address the $4.2 billion deficit. Instead, they chose to reduce the deficit with massive service cuts, irresponsible borrowing, gimmicky accounting shifts and millions of dollars in fee increases.
In its assessment of Minnesota's finances, Moody's criticized the state for relying heavily on one-time money and accounting shifts to address the budget deficit. In fact, 40 percent of the solution ($1.7 billion) came from such one-time funds and shifts. This will throw off our books in the future.
The credit rating downgrade will mean higher interest rates paid by Minnesota taxpayers when the state borrows money. It will cost the state millions more to make financial transactions in the future. In other words, another hidden tax increase.
Hopefully, from this situation the governor and Republicans will learn that their approach was not good policy; in the long run, it will hurt taxpayers.
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Dan; Sparks
State; Senator, District 27
Austin;
