Here's the story on Idaho's credit rating upgrade: It happened in the spring. In March, Moody's upgraded Idaho's rating from AA2 to AA1, and in April, Standard & Poor's upgraded it from AA to AA+. "That's one notch below the AAA," said state Treasurer Ron Crane. Because the Idaho Constitution forbids general long-term debt, that rating applies only to a few areas, including GARVEE bonds for road work, the state's bond bank and the state building authority. Most of Idaho's borrowing comes in short-term tax anticipation notes, for which the state long has had the highest rating from all three rating agencies: MIG-1 from Moody's, SP-1+ from Standard & Poor's and F-1+ from Fitch, which doesn't issue a long-term rating for Idaho.

Those short-term debt ratings are key, Crane said. "That translates to every bond that's issued in the state, all debt from all subdivisions in the state." As a result, when Idaho did its last issue of short-term tax-anticipation notes in late June, the entire $500 million was snapped up at a highly favorable interest rate of just 26 basis points, or 26 one-hundredths of a percent interest for a year. "That's virtually free money," Crane said. "That's the interest rate we had to pay to borrow, which is really, really a good rate." For the mutual funds that are the main buyers of such notes, "When Idaho comes on the market, they know they're going to get paid back, so they grab it, and it's really valuable in the marketplace."

According to Standard & Poor's, a AAA rating signifies "extremely strong capacity to meet ... financial commitments," while AA shows "very strong capacity," and "differs from the highest-rated obligors only to a small degree." For comparison, Washington state has AA+ ratings from Fitch and Standard & Poor's and an AA1 rating from Moody's; and Utah has a AAA rating from Moody's. Crane said, "We're certainly in the top tier." Idaho was rated "stable" in its most recent analysis from S&P. When that ratings firm upgraded Idaho in April, Crane said, "That was an unsolicited upgrade that occurred, and what they cited is the way that we're managing our finances. They were just very impressed with the way that we have handled this whole situation."