CHICAGO — Standard & Poor's upgraded South Dakota to AAA May 4.
"The upgrade reflects the state's consistently strong financial position and rainy-day funds, and a historical record of conservative budgeting that has resulted in recurring revenue and expenditure alignment, in combination with a fully funded pension liability and elimination of South Dakota's other post-employment benefits liaiblity," analyst Sussan Corson said in the upgrade report.
S&P had revised its outlook on the state to positive in August 2014, essentially putting its AA-plus rating on track for an upgrade. The new outlook is stable.
Lawmakers have recently enacted mandatory minimum reserve levels, which supports the top rating, the ratings firm said.
The upgrade comes as the South Dakota Building Authority — which S&P raised to AA-plus from AA — is coming to market with $11.5 million of taxable revenue bonds.
The debt is secured by lease payments from state agencies subject to appropriation by the Legislature.
S&P's stable outlook reflects positive revenue trends, strong gross state product, and strong personal income growth.
Fitch Ratings maintains an implied rating of AA-plus on South Dakota, which does not issue general obligation bonds. Moody's Investors Service does not have a state rating.
There are 10 other states rated AAA by Standard & Poor's.
