California Credit Rating Lowest in U.S.
By STU WOO
Standard & Poor's Corp. cut California's credit rating Monday to the lowest level among all 50 states because of a budget impasse between Gov. Arnold Schwarzenegger and state lawmakers.
California had been previously tied with Louisiana for the nation's lowest rating.
Arnold Schwarzenegger
The ratings firm downgraded the state's $46 billion in general obligation bonds to single-A from single-A-plus, its fifth-lowest out of 10 investment grades.
The cut reflects the agency's view of "the lack of political progress around the budget negotiations that we believe is serving to exacerbate the state's current and projected cash position," said Gabriel Petek, an S&P analyst, in a release, adding that "the state's cash position is rapidly eroding."
Mr. Schwarzenegger and state legislators have been deadlocked for three months over ways to close a budget deficit expected to reach $42 billion by mid-2010.
Because of the stalemate, California's controller on Monday began delaying more than $3 billion in tax refunds, welfare checks and other payments to prevent a cash shortfall. And starting Friday, most state offices will furlough tens of thousands of employees two days a month.
No comments:
Post a Comment