California Gets Downgraded As Markets Worry About Deficit

After a series of credit downgrades during our budget crisis last year, the score stabilized a bit during the down time.  Now, it’s been nudged back to “A-” by S&P today.

Citing serious risks in Gov. Arnold Schwarzenegger’s budget plan, Standard & Poor’s on Wednesday downgraded California’s national-low credit rating from “A” to “A-minus.”

The ratings house sees a gloomier picture this year for California’s finances because “the state’s options have narrowed considerably” and Schwarzenegger has made risky calculations in his latest budget plan to bridge a $19.9 billion deficit.

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S&P cited the governor’s reliance on “extraordinary federal cooperation” and voter approval of $1 billion in transfers from mental health and child development funds as risky assumptions. It also said the unlikelihood of the Legislature reaching a quick deal on “deep cuts as proposed” could hinder the state’s finances. (SacBee)

This comes the same time as Arnold is putting out feelers for a trip to DC to beg for cash for the state and Arnold starts talking about slapping increased fees and fines on anything that appears interesting. I hope you didn’t have plans for a free Family Fun Day at the California Science Center anytime soon.

Of course, you and I know that California is constitutionally required to pay debt before it pays anything else.  Apparently the credit agencies aren’t so sure about that.

2 thoughts on “California Gets Downgraded As Markets Worry About Deficit”

  1. This highlights where Progressives go off the rails. It’s irrational to promote bigger government regardless of the circumstances or consequences.  An “A-” rating should be a clear message to every Californian that the state is living well beyond its means. Everyone should be against more spending, and government should do everything it can to reduce the burden on businesses so they can get back to laying the golden eggs.  

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