Gov. Mark Dayton's veto of legislative funding has caught the attention of a credit ratings agency.
S&P Global Ratings said Thursday that the move prompted it to place Minnesota's AA+ credit rating on a status it calls "CreditWatch with negative implications." The agency's chief concern: whether the state will be able to continue to make payments on the new Senate Office Building and the possibility of a default on that loan.
In a statement, the agency said the "lack of agreement over the lease appropriation reflects unfavorably on the state's willingness to fund all of its debt service payments despite its ability to pay remaining very strong."
The governor's line-item veto struck out funding for the House and Senate beginning July 1. That includes $8 million in annual bond payments on the Senate's office space.
Dayton has urged Republican legislative leaders to return to the negotiating table on a handful of issues, including tax cuts, in exchange for restoring the funding.
A quick resolution to the dispute is unlikely.
The Legislature sued the governor last week, arguing that his veto violated the constitutional separation of powers between branches of the government.
"Minnesotans can rest assured that the governor is working to resolve this issue and maintain the sound fiscal management that has defined his administration," Minnesota Management and Budget Commissioner Myron Frans said in a statement.
