California's Credit Rating May Be Lowered by Moody's Amid Financial Crisis

[marmar]

California’s Credit Rating May Be Cut by Moody’s (Update3)
By Stacie Servetah and Michael B. Marois


June 19 (Bloomberg) -- California’s credit rating, already the lowest among U.S. states, may be cut several levels by Moody’s Investors Service as government leaders seek ways to eliminate a $24 billion budget deficit.

The move would affect $72 billion of debt, Moody’s said in a statement today. California’s full faith and credit pledge is rated A2 by Moody’s, five steps above junk.

Standard & Poor’s put California on watch for a possible reduction earlier this week, and Fitch Ratings did the same thing May 29. The rating companies cited the most-populous state’s deficit -- more than 20 percent of the general fund -- and lawmakers’ inability to agree on how to close the gap.

“If the Legislature does not take action quickly, the state’s cash situation will deteriorate to the point where the controller will have to delay most non-priority payments in July,” Moody’s said in a report today. “Lack of action could result in a multi-notch downgrade.”

Earlier this week, Republican Governor Arnold Schwarzenegger said he would refuse to back any tax increase as Democrats proposed a budget that would raise $2 billion from cigarette consumers and oil companies to help the state deal with declining revenue. The veto threat signaled an escalating battle over the deficit just a month and a half before the most- populous U.S. state is forecast to run out of money to pay its bills. .........(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601087&sid=aRrSwG1SyfAU

[DJ13]

1. Democrats proposed a budget that would raise $2 billion from cigarette consumers .......

That well has been tapped one too many times already.

Go after a different "sin" you stupid idiots.

[MUAD_DIB]

2. So Arnold doesn't want to raise taxes, but he is ready for draconian cuts?

What an asshole.


It must all be Clinton's fault.

:sarcasm:

[Kadie]

3. Ugh

Arnie won't raise taxes

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x5869811


Wants to take tax money from local government

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=5877363&mesg_id=5877363


and is willing to let this state go to hell in a hand basket. What are we suppose to do?

[SlipperySlope]

4. Given California's problems, I would probably lower their rating too.

Sooner or later they are going to start missing payments if they keep this us.