Standard & Poor’s yesterday revised its outlook to negative from stable on Ohio following a state Supreme Court ruling earlier this week that a key gaming expansion plan is subject to voter referendum.

The negative outlook applies to $6.8 billion of general obligation bonds and $2.8 billion of appropriation-backed debt. The agency affirmed its AA-plus rating on the state’s GOs, including $543.8 million in a deal sold this week.

Ohio’s highest court Monday ruled that Gov. Ted Strickland’s plan to install 17,500 lottery machines in the state’s race tracks must go before the voters. The administration had crafted the plan as a key to balancing the current 2010-2011 budget, and estimated it would raise $933 million in new education funding.

“The court decision adds uncertainty about the timing and realization of these revenues, which were one of the primary revenue enhancements included in the budget and represent a significant risk to Ohio’s current budget plan in our view,” analyst Robin Prunty said. She noted that the state is already suffering from diminished financial flexibility after depleting its reserve funds to help balance the current budget.

Fitch Ratings and Moody’s Investors Service lowered the state’s GO rating in June to Aa2 and AA, respectively.

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