Oil prices continue to lurk at less than $40 per barrel, and despite hope for a legislative salve, Standard & Poor’s is lowering the state’s debt rating.

S&P lowered Alaska’s general obligation debt from AAA status to AA+ and lowered the state’s appropriation-backed debt and Alaska Municipal Bond Bank’s debt from AA+ to AA. It also lowered bonds issued by the Alaska Energy Authority to A+ from AA.

Standard & Poor’s said in release the state’s widening budget deficit tied to oil prices spurred the decision.

“The rating actions reflect our view of the state’s credit quality...