After years of boasting the best bond rating possible, Minneapolis saw its bond rating downgraded one notch Monday by Moody's Investors Service from AAA to Aa1.

While financially that means it may be more expensive for the city to borrow money, it also means incumbent politicians will be under the spotlight this election season for some of their financial decisions.

Minneapolis has had an AAA bond rating with Moody's since the early 1960s. The investors service found that three of the city's six fund accounts, which allow city departments to buy from one another, had high deficits.

During the past year, the city has developed programs to pay down those deficits in less than a decade, but Moody's analysts believe the plan would take too long, according to the investors service.

Patrick Born, the city's finance director, said the downgrade might not have a major effect on the city's borrowing capacity, particularly given that Standard and Poor's, one of the other major rating companies, confirmed Monday that it would continue to rate Minneapolis AAA.

Born said the city plans to issue $102 million of general obligation bonds next week, and the rate it gets for those bonds will be the real test of buyers' confidence in the city.

Already Monday, opponents of two-term Minneapolis Mayor Sharon Sayles Belton criticized the current administration for its fiscal program.

Less than an hour after Moody's publicized its findings, mayoral candidate R.T. Rybak released an e-mail titled, "AAA fine mess at city hall."

"The Sayles Belton administration inherited a rock-solid bond rating and a soaring economy, and they leave us with increasingly shaky finances as we enter an economic downturn," Rybak said.

Later, City Council Member Lisa McDonald, who is also vying for the mayor's office, said the downgrade should serve as a wake-up call. During her time in the council, she has questioned the city's need to spend millions on development projects, and in recent weeks she's called for a review of the city's development agency.

Hennepin County Commissioner Mark Stenglein, who also wants to be mayor, criticized the spending policies of Sayles Belton and the current council. In a news release, Sayles Belton said the fund deficit reflects the city's major investment in technology [read Y2K remediation], public safety and infrastructure.

Pioneer Planet

-- Anonymous, July 31, 2001