SAN FRANCISCO — Standard & Poor’s Wednesday said it raised Oregon’s general obligation bond rating to AA-plus from AA as a result of tighter budget controls.

The rating agency also hiked the state’s appropriation-backed bonds to AA from AA-minus. The outlook for both is stable.

The upgrade affects $4.5 billion of outstanding debt. 

The higher rating comes as the state readies to sell $1 billion of bonds authorized last year, and saves the state $4.3 million for every $100 million in debt over the length of the bonds, the treasurer’s office said in a statement Wednesday.

Finance officials last recently made presentations laying out their case to credit analysts.

Standard & Poor’s said the upgrade is due to budget controls put in place to handle falling revenues.

Analyst Chris Morgan said Oregon’s reserves will likely be at the same level by the end of fiscal 2011 as at the end of fiscal 2009. Morgan noted that the state’s rainy-day and education funds should also grow.

Morgan said Oregon has strong financial practices, including quarterly reviews and forecasts, and an above-average pension funding ratio.

But the rating report also said the state has a reliance on fluctuating personal and corporate income-tax revenue and a potential for ballot initiatives that could restrict fiscal flexibility.

Moody’s Investors Service assigns the state’s GOs a Aa1 rating. Fitch Ratings rates them AA-plus.

Oregon’s debt commission told Gov. John Kitzhaber and lawmakers last month that they need to rein in general fund-backed bonding in the next two-year budget cycle.

The Debt Policy Advisory Commission said in a recent report that a sharp falloff in projected general fund revenue will push Oregon above its historic target of having debt service cost no more than 5% of general fund revenues in the next biennial budget period, which starts July 1.

The state’s Office of Economic Analysis recently increased its revenue forecast for the general fund by $3.3 million to $12.4 billion on the back of rising tax collections. The projection showed that personal income taxes are starting to recover while corporate income taxes are declining.

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