ST. PAUL (AP) -- Gov. Tim Pawlenty wrapped up three days of meetings with Wall Street analysts Wednesday -- a trip he hopes will yield another top rating for Minnesota from the three major bond-rating houses.
"We are cautiously optimistic that the information was well received," he said during a conference call from New York.
Minnesota is one of just eight states with the top rating, but earlier this year, one of those houses put the state on credit watch, meaning its rating could be in jeopardy.
The top rating is a signal to investors that the bonds are of the highest quality and, therefore, carry the least risk of default. By keeping the top rating, Minnesota can command the lowest interest rate on borrowed money to build roads, facilities and other infrastructure.
Minnesota would pay more if its rating slipped, although the amount would be relatively minor because current borrowing volume and interest rates are at historic lows. Over 20 years, the state would pay about $10 million more if its rating dropped.
"Retaining the Triple-A bonding rating is a good goal for us," Pawlenty said. "Financially, it has some modest impacts."
The state is making a $392 million bond offering on Tuesday and the bond houses are likely to weigh in on the state's rating before that happens. However the bond raters don't comment on what they might do until they take action.
As of June 1, the state had $3.4 billion in outstanding bonds and Pawlenty planned to sign a bill into law Thursday that would authorize another $236.9 million in bonds to pay for state construction projects.
The bond houses weren't concerned about that, Pawlenty said, adding that while many states are delaying paying off bonds, Minnesota impressed analysts by staying on track.
"We really are exemplary," he said.
Pawlenty also said the bond houses didn't seem concerned that the state erased a $4.5 billion deficit this year mostly through cuts and shifts rather than tax increases.
Generally, the bond houses look at the following areas to determine a bond rating: that the state has a sufficient reserve to buffer against an economic downturn, that the state is solving long-term money problems with ongoing money and that financial forecasters are predicting better days ahead.
The budget that passed the Legislature this year built up a reserve of about $530 million, which is expected to rise to $596 million with the addition of some federal money.
And lawmakers solved the ongoing deficit problem with ongoing money, using accounting shifts as a short-term fix for about a third of the shortfall.
"That's a good and positive thing," he said.
And a bit of good news trickled in Wednesday when the Department of Finance reported that revenue collections exceeded expectations by $4.1 million in May. For the year they are now $59 million more than anticipated in the February economic forecast.
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