Standard & Poor’s last Friday affirmed its AA-minus issuer credit rating on Kentucky and said the state’s outlook is positive. The agency also affirmed its A-plus rating and positive outlook on the Kentucky State Property and Building Commission’s lease-backed debt.

The ratings reflect the commonwealth’s stable economic base, which is weakening under the impact of manufacturing job losses, as well as an adequate financial position that’s partly due to budget balancing initiatives and positive revenue growth. Offsetting those strengths are growing unfunded pension and insurance liabilities that total about $24 billion.

“We anticipate steps will be taken to balance the 2009 budget without over-reliance on currently adequate reserve levels,” analyst Helen Samuelson said in a statement. “At this time, it is our view that the 2010 budget will be balanced as well, while maintaining at least adequate reserves.”

Kentucky’s outstanding debt totaled $9.2 billion, which includes $3.1 billion of moral obligation debt. Debt service as a percentage of total governmental expenditures was a low 3% in 2008, Samuelson said.

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