CHEYENNE - The state's ability to pay its bills without borrowing money resulted in an uptick in Wyoming's credit rating from AA to AA plus, Treasurer Joe Meyer announced Thursday.

Meyer also told reporters he will announce the state's investment results next week, which he described as "remarkable."

At the same time that Meyer had good news about the state's investments and financial health, State Bank Commissioner Jeffrey Vogel tried to calm residents by announcing that Wyoming banks are sound and their deposits are safe.

Meyer said the increase in the Standard and Poor's bond rating, coupled with a top rating from the Sovereign Wealth Fund Institute for the transparency of the state's finances, will lead to increased investor interest in Wyoming, including foreign investors.

What triggered the higher rate, Meyer said, was his decision a year ago not to issue tax and revenue anticipation notes to finance the cash needed for public school payments, as had been done in the past.

Most other states borrow money to pay current operating expenses.

"We have enough liquidity and a large enough portfolio, we can be like a bank and fund our own cash needs," Meyer said.

The S&P's report refers to investment policies and legislative and gubernatorial actions that have led Wyoming to be nearly the top state in the nation for its conservative financial management and large amount of reserves to protect residents from downturns in mineral tax revenues.

The investment income from the state's permanent funds is rapidly becoming the largest source of income to the state's general fund, Meyer said.

For fiscal year 2008, it is about $723 million, or nearly double last year's total.

"Things are really looking good," Meyer said.

Ironically, Meyer said, the only way to get a triple A bond and credit rating from S&P is to borrow money and pay it back. He said he is not willing to do that.

Asked how long he can expect the state's good fortunes to hold, given the condition of the national economy, Meyer said that can't be predicted.

The state's financial experts are advising to stay long in cash, he said.

Wyoming's investment portfolio is positioned well and is the most diversified of any in the nation.

The treasurer's office investment targets are 55 percent equity and 45 percent fixed income.

Vogel, meanwhile, said many depositors around the country and in Wyoming have been asking questions about the soundness of their banks after the recent failure of IndyMac Bank, a federal savings bank headquartered in California.

Many of the credit problems that led to the IndyMac's demise can be attributed to its specialized, subprime lending practices to consumers without proper documentation and assets necessary to qualify as prime borrowers, Vogel said.

"Wyoming banks have generally not offered nor originated many of these subprime products and therefore have steered clear of the problems affecting some financial institutions," he added in a release.

The state banking division regulates state-chartered banks.

Vogel said depositors should understand that their individual accounts are insured up to $100,000 per bank or $250,000 for most retirement accounts by the Federal Deposit Insurance Corp.

Additional $100,000 deposit insurance coverage may be obtained for each deposit account segregated into single and joint accounts as well as revocable trusts that generally provide $100,000 of coverage per beneficiary.

Contact Joan Barron at joan.barron@trib.com or by phone at 307-632-1244.