Moody’s Investors Service on Monday affirmed its Aa2 rating on Alabama’s $664 million of outstanding general obligation bonds and the Aa3 rating on another $171 million of debt that is subject to appropriations. The outlook is stable.

Alabama’s GO rating is based on conservative financial management and a moderate debt burden, although the state faces economic challenges and has a long history of below-average wealth levels, Moody’s said.

The state has dipped into reserves to deal with budget deficits from declining revenue, and relied on federal stimulus funding.

Alabama is receiving $816 million of Medicaid and stabilization stimulus funds, or about 12% of planned expenditures for the current budget.

Moody’s affirmation came in conjunction with an upcoming $54.6 million refunding deal.

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