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instead proposing an income tax on high earners.

While negotiations continue, it is impossible to know at this point when a budget agreement will bereached or the shape that the final agreement will take. However, it appears likely that the outcomewill continue the use of non-recurring balancing tools and that deferred payment obligations willcontinue to be a drag on the state's finances.

As noted above, Minnesota's credit remains fundamentally strong. The state has a history followingdownturns of rebuilding reserves and repaying the deferrals to school districts that have regularlybeen used as a budget balancing tool for the state. However, Fitch notes that the payment deferrals

relied upon in the recent downturn have been larger than those of the past and that the context of budget decisionmaking has become increasingly contentious over time. Taken together, Fitchbelieves that these factors result in a fiscal posture that is more consistent with a 'AA+' rating.

For more information on the State of Minnesota, please see Fitch Research dated Sept. 2, 2010,available at 'www.fitchratings.com'.

Contact:Primary AnalystLaura PorterManaging Director+1-212-908-0575Fitch, Inc.One State Street PlazaNew York, NY 10004

Secondary AnalystKen WeinsteinSenior Director+1-212-908-0571

Committee ChairpersonDouglas OffermanSenior Director+1-212-908-0889

Media Relations: Cindy Stoller, New York, Tel: +1 212 908 0526, Email:cindy.stoller@fitchratings.com.

Additional information is available at 'www.fitchratings.com'.Applicable Criteria and Related Research:--'Tax-Supported Rating Criteria', dated Aug. 16, 2010;--'U.S. State Government Tax-Supported Rating Criteria', dated Oct. 8, 2010.

Applicable Criteria and Related Research:Tax-Supported Rating Criteriahttp://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=548605U.S. State Government Tax-Supported Rating Criteriahttp://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=564546

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