SACRAMENTO, Calif. (AP) — A major credit-rating agency has lowered California’s debt rating, putting pressure on Gov. Arnold Schwarzenegger and lawmakers to start tackling the state’s deficit.
Standard & Poor’s on Wednesday lowered its rating on California’s $64 billion general obligation debt from “A” to “A-.” That’s the lowest rating for any state.
S&P also dropped $9.4 billion in lease-revenue bonds from “A-” to “BBB-.”
The lower ratings are still investment grade, but they could reduce investor demand for California’s debt and raise the cost to taxpayers of borrowing money.
S&P says the state is facing cash shortages in March and July. It worries that Schwarzenegger’s proposal to close a $20 billion deficit relies too much on federal help and underestimates the difficulty of getting voters and lawmakers to agree to his plan.