Wisconsin won an upgrade of its general obligation credit to AA from AA-minus from Standard & Poor’s in recognition of fiscal advances made over the last two budget cycles and the state’s ability to manage through a budgetary crunch with narrow reserves.
The upgrade came in connection with the rating agency’s review of the credit ahead of the state’s competitive sale of about $300 million of GOs tomorrow. The state carries about $5.8 billion of GO debt on its books and another $1.88 billion of debt backed by a state appropriation.
Faced with a downward revision of revenues available in the current two-year $57 billion budget, the Legislature this past spring passed a so-called repair bill to eliminate a $527 million deficit. The plan — reshaped somewhat by Gov. Jim Doyle using his veto pen — relied on $270 million in cuts, $57 million from the state’s reserve, $150 million in up-front savings from the tobacco restructuring, and other measures such as closing corporate tax loopholes.
Officials expect to close out the fiscal biennium next June 30 with an ending balance of about $106 million. About $65 million would go into a now-depleted budget reserve. Fitch Ratings rates the state AA-minus and Moody’s Investors Service rates it Aa3 with a negative outlook.
