The 'AAA' rating on Minnesota's GO tax-exempt and taxable state bonds reflects the following credit factors: A deep and diverse economy, supported by several regional economic centers and anchored by the Minneapolis-St. Paul MSA; Continued strong management, which is addressing both short- and long-term structural issues; Adequate remaining liquidity from tobacco settlement sources, though drawdowns are planned; and Moderate debt levels with rapid amortization and internal controls, which keep debt levels manageable. Despite better-than-projected year-end performance, ongoing revenue softness in Minnesota has currently produced a deficit of $185 million during fiscals 2004-2005. However, compared to total budgeted expenditures of $28.2 billion, the magnitude of the deficit is minor. The state expects to bring operations back into balance when Gov. Tim
