Minnesota maintains highest possible bond rating despite federal uncertainty, fiscal trends

Minnesota has earned the highest possible bond rating from three of Wall Street’s major credit agencies, affirming the state’s strong financial position despite some concerning fiscal trends and uncertainty from the federal government.

Minnesota’s AAA bond rating, which it has maintained for four consecutive years, means that the state can borrow money cheaply to fund infrastructure projects.

“While actions at the federal level are creating red flags for the U.S. economy, America’s top rating agencies have once again signaled their support for the responsible financial decisions we are making here in Minnesota,” Gov. Tim Walz said in a statement Monday. “These ratings are a testament to the strength of Minnesota’s economy and our commitment to responsible financial stewardship.”

Walz is expected to announce a bid for a third term any day now.

Minnesota is one of 16 states that have a AAA bond rating, according to the governor’s office.

Moody’s Investors Service, S&P Global Ratings and Fitch Group in their comments affirming Minnesota’s bond ratings said the state has a strong economy and a healthy reserve fund to pay off debt.

Minnesota’s general fund revenues in August were about 4% above the state’s February forecast, according to Minnesota Management and Budget, the state’s budget agency. In fiscal year 2025, year-to-date receipts are about 0.5% higher than the forecast.

In May, Moody’s downgraded the country’s credit rating, citing concern over the federal government’s ability to pay back debt.

The downgrade “reflects the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns,” Moody’s said in a statement.

Erin Campbell, MMB’s commissioner, said in a statement that Minnesota had to make difficult budgetary decisions during the legislative session earlier this year, but it has paid off through the state’s bond rating.

“We had to make hard budgetary choices this year and were able to reach consensus on those choices with the most closely divided Legislature in the country — which is a major accomplishment,” Campbell said.

The state government is confronting significant growth in health care spending due in part to the aging of Minnesota’s population and corresponding increase in people who need help, while economic growth has been hampered by a lack of workers.

MMB will make another detailed forecast in November or early December.