Moody’s prefers that state politicians put all options on the table, including general tax increases as well as spending cuts, during tough budget times. Since 2003, the Pawlenty administration has ruled out such tax increases, turning instead to a smorgasbord of spending cuts, one-time fund sources, fees, and accounting shifts. Tom Hanson, Pawlenty’s new finance commissioner, argues that today the political squabbling has eased considerably.

Carlson doesn’t sound impressed. “We expect our quarterbacks to have all of their options on the table, so why shouldn’t we expect that of our political leaders as well?” he asks.

Minnesota scored relatively well in Moody’s new “state credit scorecard,” introduced last year. The scorecard showed the state ranked among the top 10 for its financial practices, economic strength, debt policies, and management as of January 2006. But weaknesses in the job market and income have surfaced this year. That could hurt Minnesota’s bid to recapture the Moody’s triple-A anytime soon.

Here’s a modest proposal that would help Minnesota get back that top rating: Stop the political bickering. Having just two of the three triple-As seems like eating two-thirds of a bowl of Rice Krispies. Lots of snap and crackle, but not enough pop. 

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Seeking A Triple Sweep: A Tough Game

In 2003, analysts at Moody’s Investors Service dealt Minnesota its first bond rating downgrade since 1982, when it took away the state’s coveted triple-A status. The two other major rating agencies continue to put a top rating on Minnesota’s bonds, but history suggests it won’t be easy for Minnesota to climb back into the elite club of states with triple-A bond ratings from all three agencies.

Rating changes for Minnesota since 1981

6/03            down            Moody’s, to Aa1 from Aaa  

7/97            up                 S&P, to AAA from AA+

5/96            up                 Moody’s, to Aaa from Aa1  

3/94            up                 Moody’s, to Aa1 from Aa

7/93            up                 Fitch, to AAA from AA+

1/85            up                 S&P, to AA+ from AA

4/82            down            Moody’s, to Aa from Aaa

3/82            down            S&P, to AA from AA+

7/81            down            S&P, to AA+ from AAA

* Moody’s has three ratings immediately below its top Aaa Rating: Aa1, Aa2, and Aa3. Standard & Poor’s and Fitch also have three just below their top AAA rating: AA+, AA, and AA-.

Sources: Moody’s Investors Service, Standard & Poor’s, and Fitch Ratings