Fitch Ratings lowered $5.7 billion of Minnesota bonds to AA+ from AAA today, citing the state’s budget impasse and government shutdown.The ratings agency also downgraded the state’s school district credit enhancement program to AA from AA+.
Minnesota lawmakers’ inability to reach an agreement over the state’s $5.5 billion budget deficit is the primary reason for the downgrade, the agency said in a release.
Republican lawmakers met again with Democratic Gov. Mark Dayton this morning to discuss the K-12 education budget. The two parties are close to an agreement on education spending, but did not negotiate an overall budget deal, GOP negotiators told Minnesota Public Radio.
The Republicans again called on Dayton to order a special session so the Legislature can pass a bill to partially restart the government.
A report from a six-member panel led by former Vice President Walter Mondale and former Minnesota Gov. Arne Carlson urged the government to use a combination of spending cuts and new revenue to close the budget gap.
The proposal, released this afternoon, recommends cutting $3.4 billion from the current budget and raising $1.4 billion in new revenue, including $250 million in increased human services charges, $330 million from cigarette tax hike, and a temporary 4% income tax increase.
Dayton rejected the commission’s income tax proposal, reiterating his push for a 2% income tax hike on wealthy Minnesotans.
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