Fiscal Issues & Geeky Stuff

Minnesota’s Legislature is considering a constitutional amendment that would require a supermajority vote in both the House and Senate to raise taxes. This change, however, will reduce financial flexibility of the state to raise revenue in the future, and may risk the sate’s credit rating.

According to a recent Minnesota Budget Project report, Minnesota’s credit rating is already on unstable footing, as credit rating agencies become increasingly concerned about the lack of long-term budget solutions across the states.

The report cites several recent examples that states suffered a hit to their credit standings, as the rating agencies cited limited financial flexibility and reliance on one-time measures as contributing factors to the downgrades. The link between financial flexibility and state’s credit rating, however, remains a hypothesis to be tested in research -- a topic that suits my interest very well.