Budget Dispute Won’t Immediately Hurt Bond Rating
New York, NY (KROC-AM News) - A major Wall Street bond rating service issued an opinion today concerning the ongoing budget dispute between Governor Mark Dayton and Republican legislative leaders.
A court hearing is scheduled a week from today concerning the lawsuit filed by the lawmakers challenging the constitutionality of the governor’s use of line item vetoes to remove operational funds for the state legislature from the next state budget. The Republicans contend the governor’s move could harm the state’s credit rating because the legislature lacks the money needed for lease payments on the new State Office Building that are directed toward paying off the bonds issued to finance the project.
The report from Fitch Ratings says the current situation does not have an immediate impact on the firm’s rating of the state or its debt, noting there is ample time to resolve the dispute before the next debt service payment on the bonds affected by the veto is due in December, and Fitch believes the state will work to ensure the $2 million payments is made on time.
If the conflict continues long-term, and Wall Street decides the level of political discord has risen to the point that debt service payments could be at risk, Fitch says the rating for the Senate Office Building bonds and the state’s overall credit rating would likely be downgraded.