Standard & Poor's California Rating: State's Bond Outlook Upgraded To Positive

SACRAMENTO, Calif. -- Standard & Poor's on Tuesday improved California's bond outlook from stable to positive, a sign the state might be poised for a credit-rating upgrade if the Legislature continues to make spending cuts and tax revenue meets projections.

Although California still faces a $9.2 billion deficit, the credit rating agency said the state has corrected a significant portion of its budget imbalance.

"We are revising the outlook because, barring any other credit deterioration, (we) think the state is poised for credit improvement – and potentially a higher rating – pending its ability to better align its cash performance and budget assumptions," S&P analyst Gabriel Petek said in a statement.

The agency's report says a higher rating is contingent on sufficiently credible solutions to the state's $9.2 billion deficit. That would include automatic spending cuts that are not subject to changes after the November election, if voters reject Gov. Jerry Brown's tax hikes.

Brown has proposed a mix of cuts and temporary tax hikes but Democrats who control the Legislature are opposed to more cuts.

If the state can reach a balanced budget by the summer, California's low credit rating might be turning a corner.

The last time the rating agency gave California a positive outlook was June 2007, when it had an A-plus rating. It now has a rating of A-minus. California's outlook improved from negative to stable last July after the last budget was passed.

Revenues, however, remain a concern. Last week, the state controller's office released its latest monthly report showing tax collections came in $528 million below the January projections in the governor's proposed budget.

"Our rating is still near the bottom when compared to other states," Senate Republican Leader Bob Huff, R-Diamond Bar, said in a statement. "While this is movement in the right direction, Californians should delay celebration until we're closer to the top than the bottom."

Comments

[Scott Zwartz]

05:47 PM on 03/01/2012

One reason California is financially stronger is that it abolished the CRA's which were siphoning off over $6 Billion in taxes each year. Now that the state is no longer making that donation to the pocket books of the 1%ers, it has $6+Billion more per year to pay its bills.

[Soc3947]

06:58 PM on 02/15/2012

We can borrow more....

[SwitchboardPub]

07:56 AM on 02/15/2012

How many elderly, disabled, and poor have had to suffer for this? How many more this year? There is nothing to celebrate unless you are part of the elite. The liberal San Francisco elite or the Stanford right wing elite, makes no difference, you all have blood on your hands and lies in your mouths.

[krtbossman]

12:10 AM on 02/15/2012

I think they are just going to raise taxes, and then will the increased revenue they will spend more money creating a vicious cycle and not fixing the real problem which is over spending.

[billy goat]

02:30 PM on 02/16/2012

In your personal situation, when was the last time your mortgage/rent payments decreased? Health care costs. School tuition. New car prices. Insurance. Cable, PGE. Water Sewer. Everything costs more. The debate we are having now in CA and nationwide is what is our commitment to our infrastructure, education, social services etc. With that consensus we then need a sensible system of maintaining revenue necessary to pay for it. Make no mistake though, whatever CA and the Federal govt decides to maintain, costs will continue to rise, and revenue will have to rise to meet them. That's the market place.

[krtbossman]

02:56 PM on 02/22/2012

Ok, well I may be just a stupid kid. But I had to pay for my own car, and I have to pay 1/2 my college tuition, and my insurance, and fuel. I know things are costing more. I don't spend more than I know I have the ability to repay. I think that's pretty responsible for a stupid kid.

[justanoldhippie]

09:52 PM on 02/14/2012

California's credit rating has been "iffy" for much longer than Brown's been in town: http://www.stateline.org/live/details/story?contentId=593614

As usual, its an Ugh-Publican [Senate Republican Leader Bob Huff, R-Diamond Bar] that throws the "downer" wrench into any bit of good news. Considering that we go hit hard by the foreclosure crisis... I'll take any positive news.

[IBWatching]

09:07 PM on 02/14/2012

Good news.

Now we can agree to the Governor's proposals to raise additional state revenue, and then stop attacking the disabled and elderly and those who service them in order to balance the budget on the backs of those who can least afford it.

[enigma2]

09:22 PM on 02/14/2012

I agree with you, sure looks as though we are on the mend, or are my eyes deceiving me, we went from a reported 27 billion dollar deficit down to 9 billion, not too shabby.

[REDSTATEREFUGEE]

03:21 PM on 02/16/2012

We paid a price, though, in health and human services, public safety and prisons, and education. Our public schools have been devastated and, in my world, the UC, CSU, and California community college ( CCC ) systems have similarly lost ground.

At most CCC institutions, several years of state funding decreases have, inevitably, led to entire courses, and, in some cases, departments, disappearing, as well as reduced core classes being slashed, sometimes as much or more than 25% of previous offerings. Result? Students who wanted a better life are now consigned to McJobs, learning such valuable skills as how to say, "Would you like to Super Size that, sir?"