Ratings agency Standard and Poor's has held Western Australia at a AA+ rating with a negative outlook, suggesting a 30 per cent chance the state's credit rating could face a further downgrade.

WA lost its AAA credit rating with Standard and Poor's in September 2013.

The agency said the risk of another downgrade was due to the potential for further weakening in revenue, or a failure by the Government to constrain spending growth.

It said the falls in the iron ore price, with accompanying falls in royalty returns, was continuing to put pressure on the budget which was forecast to remain in deficit for the next two years.

"The rating affirmation reflects our view that the state's likely higher share of Australia's goods and services tax (GST) revenue will enable the state to achieve small operating surpluses after the year ending June 30, 2017, turning around the state's expected cash operating position from deficits in fiscal years 2016 and 2017," S&P said in its statement.

"However, the budget has little room for further slippage, in revenue or spending without resulting in a period of sustained cash operating deficits.

"Further, we consider it will be challenging for the state to achieve its savings targets. These risks are reflected in the negative outlook."

Western Australia lost its AA1 credit rating with rival agency Moody's in August 2014, which placed the state on a negative credit outlook in June.